Regulatory reforms around the world are forcing financial services firms to make decisions about which activities they want to continue to include in their core business and which they are willing to shed, a recent industry study has found.
Organisations are being forced to consider this direction due to the new compliance requirements resulting from the changes to regulations.
"The first impact of all of this compliance activity that is going on is that organisations are having to make some very hard choices about what they can and can't do from a financial point of view," Deloitte global managing partner of financial services Chris Harvey said.
According to Harvey, the new direction HSBC had taken as a result of mandatory capital requirements dictated by the regulators typified this phenomenon.
"The announcement HSBC made a few weeks ago now ... laid out the bank's new strategy. In that he [CEO Stuart Gulliver] basically said HSBC had done some analysis that showed that it was not able to and didn't want to be all things to all people in all markets anymore," he said.
"It's the first time, certainly in my experience, regulation and certainly the regulation around capital is now driving business strategy."
In addition, financial services firms are also using the need to review their operations due to this regulatory reform as a catalyst to improve their business procedures.
For example, many are having to revisit their customer bases in detail due to reforms like those contained in the Future of Financial Advice framework and are seeing this as a competitive opportunity.
"They're saying actually this is a great opportunity because the more we know about our customers, the more we can design products and services that better meet their needs, the more we can cross-sell our products and services to those customers, and the more we can tailor our offering to them," Harvey said.
