- Published: November 25, 2021
- Updated: November 25, 2021
- Language: English
- Downloads: 7
Undoubtedly, the banking industry plays an imperative role on the economy of any country. Therefore, the financial predicaments that were experienced in the investment banking industry were without a doubt accountable for the rigorous and invasive conventions in recent times. That explains why the industry has been bombarded with such regulations as they try to recovery from the crisis something that necessitates new strategies that would enable them to cope endure in the business. By illustration, some of the recent regulations include but not limited to Basel III, Financial Transaction Tax (FTT) Act, and European Banking Authority (EBA) Governance Guidelines (Kosters, Marvin, and Allan, 308-312). Given that they took the industry by surprise, they brought with them new approach that the banking industries would be conducting their business. It is from such a rationale that the paper would be expounding and giving further details on how firms ought to adopt as well as the impact that would result on the banking appointment approaches.
As mentioned exceedingly, the regulations necessitated firms to adapt new strategies. For instance, they were compelled to enhance their technological capabilities. Through such capabilities, the banking industry would enrich their communication networks with their trade partners. Moreover, the improved technological capabilities would enable those in the industry to have information in better formats as well as in superior degrees and rate of recurrence (Hayes, Samuel, Andrew, and David, 81-83). Through that, better decision making would be a reality helping the industry stay away from the crisis they encountered in the previous years. Focusing on driving greater financial and operational efficiency as well as adapting a business model that would match the new introduced regulations are additional strategies that would be adapted by the banking industry. By converging more on operational efficiency, the firms in the industry would be in a position to avoid the financial crisis that resulted to the regulations. In addition, the strategy requires that the firms do an elevation of their systems to ensure that they optimize the process of their margin collection (Wandhöfer, 19-230. Worth mentioning under this classification is the prioritizing of assortment optimization. Considering the fact that the industry will certainly be pressed hard by the new regulations, it would be beneficial if they would ensure their resources are used properly. Such would be attained if the firms would venture in liquid assets as well as those asset mix that has less chances of formulating or necessitating new capital to succeed (Liaw, 3-8). That way, they would be in a position to moving towards the mentioned optimization.
Closely related to the above is the fact that the adapted regulatory transformations impacted on all the sectors of the banking industry with the hiring strategies not an exception. In order for them to cope with the high levels of procedures, the industry ought to reduce capital demanding procedures. Hiring new workforce for instance would necessitate application of more capital to payments. As a result, it would be better for the industry to increase the motivation of their existing workforce (Hayes et al, 81-83). By so doing, they will be encouraged to take an increased work load that would have forced or necessitated new manpower. As mentioned above, the introduction of new technological capabilities into the industry would imply that less hiring would be required. At the same time, the new capabilities would require less resources to maintain as compared to new employees being hired (Kosters, Marvin, and Allan, 309-311). Equally, the technological advancements would result to reduced errors that were as a result of human in-capabilities. Such minor errors and in-capabilities resulted to the financial crisis in the long run. Hence, automation is doubtless a strategy that would be considered by the banking industry to ensure that they match the stated rules and regulations aimed at avoiding the crisis. Although the new regulation might be viewed as severe in the initial stages, they are however new opportunities for the industry in reducing capital extensive manpower activities that were shrinking their profit margins. Such actions in turn compelled the players in the industry to cut on their trading with other plays something that would result to increased profit margins (Liaw, 2-7). Nevertheless, the adapted strategies by the firms would result to increased consumer protection as well as having cautioning indicators that be of help in case of a repeat of the financial crisis experienced in the previous years.
In closing, it is evident that the new regulations were introduced into the system with an objective of preventing the financial crisis that was experienced in the previous years. As mentioned exceeding, the banking industry is an imperative sector in the economy of a country. Hence, notwithstanding of the stringent rules and regulations, the firms in the industry would only turn such happenings to new opportunities. There are several ways that would be adapted by the firms and few of them have been given precedence surpassing. Moreover, the sway that the new regulations brought about to the banking hiring strategies have been elucidated in detailed exceeding. As a result, it would be to the best interests of the firms in the industry to evolve accordingly to cope with the said regulations in the industry.
Hayes, Samuel L, Andrew M. Spence, and David V. P. Marks. Competition in the Investment Banking Industry. Cambridge Mass: Harvard University Press, 1983. Print.
Kosters, Marvin, and Allan H. Meltzer. International Competitiveness in Financial Services: A Special Issue of the Journal of Financial Services Research. Boston: Kluwer Academic Publishers, 1991. Print.
Liaw, K T. The Business of Investment Banking: A Comprehensive Overview. Hoboken, N. J: Wiley, 2012. Print.
Wandhöfer, Ruth. Transaction Banking and the Impact of Regulatory Change: Basel Iii and Other Challenges for the Global Economy. , 2014. Internet resource.