Regulation Takes Centre Stage - Securities and Banking Update May 2005

As the financial services industry stands at a new watershed, Chris Gentle, Director of Research at Deloitte Global Financial Services, explains which issues will drive the reshaping of the industry and forecasts some major changes.

The pendulum is swinging. Not for a generation has regulation played such a central role in the destiny of financial institutions. In the 1970s and 1980s the walls that separated activities of financial institutions were torn down in an era of great liberalising reforms. A period of rapid and sustained transaction activity took place changing the financial services landscape.

Today we stand at a new watershed. The confluence of an avalanche of regulations, ill-prepared IT and compliance procedures and low-growth-low-inflation environment is likely to bring about this watershed. What is different is that the walls have not been reconstructed; rather regulators are using the levers of market practice and capital management to shore up financial services