Full Report haracteristics of the reforming industr ‹hen considered in total it is clear seven distinct ‚ut inter­oven that these pressures are intenseˆ From characteristics emerge‡ all of ­hich ‚anks a considered appreciation of the cumulative ­ill need to respond to as the ‚uild‡ and impact of the pressures outlined ‚elo­‡ hone‡ their future strategˆ –see figure — Figure 4 haracteristics of a Reforming Industry Increased aƒital onstraints Intense Regulatory ‚versight ccelerated Product ommoditisation ignificant Regulatory rbitrage Reduced Proƒrietary Risk ­aking Integrated „lobal Marketƒlace Heightened omƒetition Source Accenture Research A ­idespread sŒueeŽe efficient in their capital allocationˆ Secondl‡ and the emergence of significant market on traditional sources certain asset classes and products tpes ­ill infrastructure opportunitiesˆ struggle to generate returns that e‘ceed ›eading investment ‚anks ­ill also have of profita‚ilit their cost of capitalˆ nder these changes‡ to contend ­ith reduced proprietary ris „an sources of the spectacular profits ‚anks should use return on risk’­eighted taingŒ Reliance on principal activities that ‚anks en™oed up to 2”” have assets as the central measure of a ‚usiness as a source of revenues differs ‚et­een ‚een the direct target of national and line’s performanceˆ institutions‡ and remains some­hat international regulators‡ sŒueeŽing Accelerated product commoditisation opaŒue‡ ‚ut ­hatever final form the ‚anks alread suffering from continued is also transforming large parts of the ‘¦olcker rule’ takes it ­ill significantl economic malaise investment ‚anking ‚usinessˆ ‹hilst curtail profita‚ilitˆ The stipulations are Increased capital constraints that ‚anks products and processes have al­as likel to ‚e intricate and comple‘‡ ‚ut face ­ill radicall alter the strategic decision commoditised‡ technolog developments man ‚anks have reacted ‚ simpl making processˆ The Basel III accord are significantl accelerating the pace divesting funds and dismantling once underpins this ne­ focus on capital ‚ut the of commoditisationˆ This ­ill ‚e further priŽed proprietar trading positionsˆ headline percentages mask the scale of the accelerated in the immediate future for As risk taking shifts to the ‚u’side‡ changeˆ As ­ell as raising the reŒuired ratio‡ certain derivatives products follo­ing a investment ‚anks are likel to focus this agreement recali‚rates the calculations‡ num‚er of regulator mandates‡ ­hich efforts to take on risk through providing meaning‡ in dollar terms‡ the capital held on ­ill result in previousl attractive margins risk management solutions to clients ‚alance sheets ­ill increase sharplˆ This is in the most liŒuid derivatives –eˆgˆ Interest or managing their o­n e‘posure on ‚efore accounting for various national Rate S­aps— collapsing at precisel the same a sophisticated‡ intra’da ‚asisˆ add’ons‡ additional reŒuirements for ¥’SIFIs time that huge investment is reŒuired in –¥lo‚al Sstemicall Important Financial the technolog reŒuired to trade themˆ Institutions—‡ or the impact of sovereign de‚t This is likel to lead to ‚oth a standardisation ­rite do­nsˆ This ­ill have t­o important of ‚u’side reŒuirements‡ as clients are effectsˆ Firstl‡ ‚anks ­ill need to ‚e more un­illing to pa the price of specialisation‡ 