Is European Regulation the Stepmother of Invention?

Published by: TowerGroup

Published: Jun. 30, 2008 - 4 Pages

Table of Contents

Report Coverage

Background

Measuring ROI from Regulation

Payments: Development at the Speed of the Slowest

Mind Shift Required

The Way Forward

Summary

Abstract

TowerGroup Take-Aways

• The rate of change in the payments business can be measured in terms of centuries because industry consensus has forced all banks to march at the pace of the slowest.
• Regulators typically intercede in a market to stop practices they deem unfair to competition; in payments, however, they need to create such practices to stimulate competition.
• Regulators in the payments industry need to create not just a level playing field but also opportunities for banks that can respond to change.
• Because regulation will affect different banks in different ways, a bank's key to success may be in understanding the distinctions among them.
• Payment operations are seeking a balance between the need for industry standardization and the need for change.
• The payments back office may someday become a "business," but it must change it many ways before it achieves this desired state.

Report Coverage

This TowerGroup ViewPoint considers the impact of regulation in a more positive light than that in which the financial services industry in Europe typically sees it. It offers points of reflection on the need for regulation and the purpose of regulation. It also considers whether the financial services industry spends too much time trying to fight regulation. In reality, regulations can present banks with as many benefits as they do challenges. Banks now need to decide if they should embrace regulation and use the payments process to drive change in their organizations.

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