White Papers

It is not exaggerating to say that, from a Financial Institution’s perspective, the "Credit Crunch" has changed everything, particularly in the areas of capital adequacy and regulatory compliance systems. As a result of the Credit Crunch and the Financial Crisis that has followed, the fundamental structural changes that are now taking place in the banking industry are generating a huge amount of additional workload for senior management, boards and regulators alike. The sheer scale of the changes that are happening is mind-boggling. However, there will come a time when the changes have their desired effect and the banking sector will take on "business as usual", not as it was, but in a very different shape. This different shape may well reflect a banking model that harks back to the days before capital markets took on such an important role in the creation of leverage in the system and also in the process that became known as "disintermediation". Disintermediation will have effectively been dramatically reversed with, it is to be hoped, a positive impact upon banks’ ability to manage their core interest margin so as to improve profitability to recover the losses experienced.

This paper outlines some of the impacts that can be expected as well as suggesting approaches to solving them and the sort of help that financial organisations should expect from domain consultants and technology specialists to meet these challenges.

Author: Simon Baker, Deputy Head of Consultancy