Future of the Financial Industry Herman Dijkhuizen 22 June 2012 0
FS environment Regulatory & political pressure and economic and euro crisis 1
Developments in the sector Deleveraging, regulation and too big to fail Deleveraging the financial sector Pressure to deleveraging Less capital available for innovation? Too big to fail Further outlined by EC Applicable to insurance companies? Increasing regulation 2
Developments in the sector The burden of regulation grows... IFRS UCITS IAIS ICP Living will AIFMD Dodd-Frank Remuneration Solvency II FATCA Local Legislation PRIPS MiFid II Basel III CRD Depositary Regime Credit Rating EMIR/ OTC Derivatives Global Legislation Bank taxes SIFI ARAS. but this changing regulatory landscape will also open up all sorts of opportunities 3
Developments in the sector Transformation is driven by regulatory requirements and client expectations F i n a n c i a l I n s t i t u t i o n s TRANSFORMATION There is an increasing need to transform thinking about being accountable in the current climate Accountability Financial reporting Sustainability Integral accountability shareholders direct stakeholders society at large 4
Developments in FS Sector Banking Weak demand Cyclical factors Other factors Government lending requirements Significant impairments Low to zero interest rates & Ongoing shift in consumer behavior Rising capital requirements and funding constraints More concentrated competition Forceful regulatory and government interventions Leading to International and national redesign of the regulatory framework Involvement of political bodies in banking (Government, EU, G20) Divestment, separation and integration Focus on capital and funding management Finance and risk transformation Cost Management and Legacy reduction Customer centricity Sustainable banking (consumer franchise value, soft controls framework) 5
Developments in FS Sector Insurance Cyclical factors Other factors Pressure on revenue Low interest rates Governance and internal controls Change in distribution channels & Move towards risk based capital and solvency measurement Solvency II Focus on risk management ORSA Changes in accounting, valuation and disclosure (IFRS 4 phase II) M&A activity Shift in consumer behavior Leading to Regulatory changes and request to implement Solvency II Pressure on solvency, ratings and interest spread Divestment, separation and integration Quest for efficiencies in core processes Focus on capital management Finance and risk transformation Cost Management and Legacy reduction Changes in investment strategy Re-evaluation of distribution channels Re-evaluation of products, new products & product design. 6
Developments in the sector Investment Management squeezed in the middle Banking regulation Insurance regulation client client Banking distributor Investment Management distributor Insurance competitor competitor group group 7
In summary on the agenda of the financial industry Evolution of regulation (short term); Long-term interest rates and investments (medium); and Clients: gaining back the trust and coping with changes in society (long term) 8
Thank you 9