Global banking: Foresights and insights Banking: the road ahead
The financial crisis, Basel III, Dodd-Frank and global industry reforms have profoundly impacted the banking landscape. In this collaborative Knowledge@Wharton video series, The Wharton School of the University of Pennsylvania professors and Ernst & Young professionals address the challenges and opportunities facing banks in the future.
Banking: the road ahead (Part 1 of 11): As regulations evolve, global banks should focus on their core businesses and areas most likely to generate profits.
Governance challenges (Part 2 of 11): Despite uncertainty over how new regulations will be interpreted by regulators, banks will need better internal dashboards to meet and help shape new requirements.
Capital requirements and Basel III (Part 3 of 11): Uncertainty over capital requirements makes forming a strategic view difficult, but at least one thing seems certain: stricter requirements will likely reduce the return on assets.
Global banks face increasing complexity (Part 4 of 11): Is the increasing — often overlapping — re-regulation effort by various countries, regions and international bodies a recipe for confusion?
How level is the playing field? (Part 5 of 11): Time will tell how new regulations will be implemented. Expect an uneven playing field for a while, perhaps offering opportunities for regulatory arbitrage.
Regulatory impact on return on equity and dividends (Part 6 of 11): Expect declining ROEs, rising costs of capital, shrinking margins and growing interest in businesses requiring less capital and liquidity. How will this affect credit creation and intermediation?
Models for future growth (Part 7 of 11): Picturing growth models is difficult while the dust settles around new regulation, but the focus on customer needs and investments in emerging markets will climb significantly higher.
The potential in China and other emerging markets (Part 8 of 11): Cracking the Chinese market will be challenging. Of the major players, Brazil may offer the most opportunities because it is the most integrated with world markets.
What level of IT investment will be required?(Part 9 of 11): During the financial crisis, many companies were unable to access crucial information quickly. As a result, expect increased IT investment for improved metrics and reporting.
What role might CoCos play? (Part 10 of 11): Contingent Convertible Bonds (CoCos) can offer needed flexibility for banks and investors alike. But some fundamental challenges need to be worked out.
Lessons learned from the financial crisis (Part 11 of 11): Whether lessons were learned from the last crisis remains to be seen. Along with looking back to gain insight, banks must look ahead: what is the next risk and how should you prepare?
Global banking: foresights and insights (full video): Professionals from EY and Wharton discuss the challenges and opportunities banks face today - and tomorrow.
Steve Sherretta, Knowledge@Wharton editor
Professor Richard Herring Co-Director of The Financial Institutions Center at Wharton and Co-Director of The Shadow Financial Regulatory Committee
Bill Schlich Global Banking & Capital Markets Leader, Ernst & Young LLP
Don Vangel Senior Advisor, Banking and Regulatory Matters, Ernst & Young LLP
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.