NU Online News Service, Dec. 11, 2003, 11:50 a.m. EST – Senior financial services executives expect to see significant restructuring in their industry over the next few years, according to results of a recent online survey conducted by PricewaterhouseCoopers L.L.P., New York.[@@]
The survey attracted participants from 123 financial institutions.
Almost 80% of the respondents said they expect to see big changes at their companies within the next 5 years.
When asked about the issue most likely to have an effect on their firms’ restructuring strategies, 64% of the respondents named regulatory capital requirements, and 51% said increasing compliance burdens and capital requirements will make their companies more likely to leave existing businesses.
In Western Europe, 62% of the respondents said compliance requirements will make their companies more likely to leave existing businesses.
Nigel Vooght, a partner at PricewaterhouseCoopers, says the belief that compliance and capital requirements will force many big financial services companies to reshape their operations is widely held.
Many feel that compliance and capital requirements could force some companies away from manufacturing products and toward serving solely as distribution networks for other players, he says.
Meanwhile, smaller players are facing pressure to consolidate to share costs, Vooght says.
“Costs of compliance will hit the smaller players more,” Vooght says. “What capital is required will depend on their business mix.”
What the requirements likely will not do is stop or sharply reduce the sale of some products and services, Vooght says, “because one man’s [meat] is another man’s poison.”
“You will see [companies] moving into their core competencies and disposing of niche businesses that are not necessarily a core skill,” Vooght says.
But, there are equal numbers of companies whose core businesses are the niche markets of others, so when one company abandons the sale of a product, another will emphasize it, Vooght says.