The Competitiveness Challenge: Banking

1
The Competitiveness ChallengeBanking
Financial ServicesIBF Breakfast Briefing,
November 30 2004

• Patrick McNutt
• www.patrickmcnutt.com

2
Outline of Presentation

• Competitiveness Defined
• The Competitiveness Challenge
• Retail Banking, Financial Services the
  Competitiveness Challenge
• Understanding 21st Century Competition
• Concluding Thoughts

3
Competitiveness as Hamlet without the Prince of
Denmark

• Viewed in terms of competition nation
  businesses comparative advantage or facilitated
  competition
• Business decision rule responding to market
  events foreign sourcing interdependence
• Competing in a geographic market? Cross-border
  v financial markets evolving as systems
• Handling regulatory burden in a new world of
  governance post-FSAP harmonisation

4
The Competitiveness Challenge

• Reality check are you a global or niche player?
• How to manage Irish businesses in the wider
  context of (say) the EU
• Capture value and also enhanced foreign capacity
  to capture value (reverse engineer)
• Big in local concentrated market v small globally
  
• Based in Ireland (yes/no) but can act globally
  (yes/no)?

5
Retail Banking, Financial Services the Challenge

• About being a different type of bank or financial
  institution financial conglomerate or
  traditional retail bank financial innovations
• Strategy becomes more geographically focused
• Strategy becomes more organisationally coherent
• Do not destroy value or dilute EPS
• Understanding 21st Century Competition

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Understanding 21st Century CompetitionMicro-struc
ture

• Focus on costs choice of cross-border entry
  model subsidiary or branch network.
• Obtain (international) economies of scale
• How supportive is government policy?
  Consolidation of retail banks at a national
  level?
• Financial innovation something new that reduces
  costs or satisfies customers demands
• Impact of Technology on B2C and B2B
• Competition leads to concentrated markets

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Understanding 21st Century CompetitionMacro-struc
ture

• Working together solution financial services and
  the regulators
• Financial rules should be competition-neutral
  let the market evolve
• Globalisation international competitiveness
• ECs FSAP Realistic Target 2005?
• CESR and Uniform implementation of Directives
• EC Directives v US law

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Concluding Thoughts

• Transposing into national law equivalence
  co-operation amongst competitors
• Pan-European Ombudsman v EU SEC
• Integration Domestic consolidation ahead of
  the pack v lagging-behind
• Define Competition in a conglomerates world
• Lamfalussy flexibility encouraging innovation
• Competitiveness as a bank or financial
  institution what market should we be in?

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Pause and Reflect

• Ideal Goals Grow Faster Than The Means of
  Attaining New Goals Allow
• deJouvenal