APRA draws on supervision, research, data and engagement with stakeholders to identify emerging risks and opportunities. This section outlines the issues which have had the most material influence on our strategic priorities.
APRA Corporate Plan 2026-27
Our operating environment
Australia’s financial system is resilient, but risks in the operating environment are rising. To sustain resilience, risk management practices will need to be strengthened in key areas.
Alongside a more complex and interconnected risk environment, regulated entities are navigating significant competitive and structural pressures that are reshaping traditional business models. Across all sectors, entities are needing to adjust to the impact of digitisation, new sources of competition and changing customer preferences. These trends are typically more acute for small and medium-sized entities given scale challenges.
Banking
Australia’s banking system remains unquestionably strong. Banks are well capitalised and have robust liquidity buffers, supported by strong prudential settings and sound asset quality. Over the past decade, banks’ capital ratios have increased significantly, the risk profile of housing lending has improved, and aggregate earnings have remained robust.
While this places the system in good stead to withstand future shocks, structural shifts are changing competitive dynamics and challenging traditional business models. Technology, evolving customer expectations and demographic trends are reshaping how Australians access banking services, with growing demand for digital banking products that are safe, simple and immediately accessible. New entrants, particularly those in the payments industry, are adding to competitive pressures.
Looking ahead, these forces are likely to intensify, requiring banks to continue evolving their business models and capabilities. APRA’s focus is on ensuring its prudential framework remains proportionate and supports a resilient, dynamic banking sector that can prudently adapt to a changing environment.
Banking snapshot accessible version
Superannuation
The superannuation industry is also facing significant structural change. As Australia’s population ages, the system is increasingly shifting from an accumulation phase to a retirement phase. Trustees will need to adapt to the changing needs of members, balancing the delivery of sustainable retirement incomes with strong investment governance, sound risk management and operational efficiency.
At the same time, changing member expectations, growing scale and interconnectedness, and more complex product offerings are requiring greater sophistication in risk management. The collapse of Shield and First Guardian Master Funds highlighted the significant harm that can result from poor investment governance and inadequate oversight. Across the industry, risk management and governance practices need to mature further.
Superannuation snapshot accessible version
Insurance
Australia’s insurance industry remains well capitalised and profitable overall, with strong capacity to meet claims. However, it continues to face a range of structural and emerging challenges.
- In general insurance, affordability and availability remain under pressure from higher claims costs, natural hazards and climate-related risks contributing to a widening protection gap.
- Life insurers continue to navigate sustainability pressures from legacy products, lapse rates and claims experience, including mental health-related claims.
- Private health insurers face ongoing pressure from an ageing population, rising health claims costs and affordability challenges for policyholders.
These are complex challenges, which are reshaping the insurance landscape. Responding effectively will require insurers to rethink established approaches and build new capabilities.
The rapidly changing operating environment also presents new challenges for regulators. To remain an effective regulator, APRA must too strengthen its capabilities, improve its agility and modernise how it works.
Footnotes
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Robust mortgage prepayment and equity buffers provide an important risk mitigant.