Regulatory change, fiscal pressures, social and political unrest are creating instability with the potential to disrupt commercial models and organisational structures across the financial services sector.
In the race to adapt, financial services businesses are often responding in reactive and ultimately unsustainable ways. But some forward-looking organisations are using the shake-up to redefine their strategies and take advantage of a once-in-a-generation opening up of the marketplace.
Regulatory change will be a way of life for the foreseeable future. It’s vital to look beyond compliance to understand how these developments will affect your costs, product design and organisational structure.
Fiscal pressures are further undermining global financial stability by forcing some economies to the brink of default, threatening the solvency of weakened banks and making capital markets more volatile.
The world has become increasingly unstable in recent years. Your business will need to consider how heightened social and political instability could affect your risk profile, in particular investments and operations in countries and commercial sectors that are potentially vulnerable to protest and unrest.
Businesses can capitalise on this instability by embracing, rather than tolerating, regulatory change, adopting a global mindset and identifying businesses and geographies to focus on and areas to withdraw from.
One of the lasting legacies of the financial crisis will be the global nature of regulatory change, a very significant departure from the pre-crisis ‘light tough’ regimes where countries were afraid to regulate the FS sector more heavily due to a fear of driving businesses and capital to less regulated geographies.
The huge cost of the financial sector bailouts will have an effect on the FS sector and the economies of certain countries for many years to come.
Banks that tried unsuccessfully to compete globally are returning to their core markets, leading to a more fragmented FS sector, whilst government austerity programmes will continue for years to come.
FS businesses that are smart, agile and able to predict where the sector is going will be best placed to capitalise on this instability, rather than the pre-crisis too big to fail banking leviathans.