The Changing Financial Landscape
|Chapter 4 Summary . . . |The Changing |
| |Financial Landscape |
Overview
The combined forces of changing customer needs, technology driven innovation and regulatory change (discussed in the three preceding chapters) are imposing substantial change on the landscape of the Australian financial system.
For the purpose of its task, the Inquiry considers it unnecessary to predict precisely the future shape of the industry. To do so accurately would be impossible. Rather, it has confined its analysis to identifying the broad directions of change which are now under way.
Four broad changes are identified.
Key Findings
Increased competition will result in the rationalisation of pricing and costs. There will be no room in a competitive market for non-commercial mispricing. Competitors with high cost structures will also be forced to rationalise their operations in order to remain competitive.
The Australian economy and its financial system are now closely linked to international markets. Financial services participants in Australia face increasing competition from offshore providers and are simultaneously pursuing international opportunities themselves.
Increased conglomeration and further market widening will continue to challenge traditional institutional and regulatory boundaries. New competitors are also emerging from outside the finance industry. As competition intensifies, many firms will seek to specialise in those activities they perform best, causing the value chain to disaggregate. Alliances, joint ventures and outsourcing are likely to become commonplace.
Markets are increasingly challenging intermediaries for the provision of finance and the management of risk. Large corporations have had access to financial markets for some time, but developments in securitisation now
| |Financial Landscape |
Overview
The combined forces of changing customer needs, technology driven innovation and regulatory change (discussed in the three preceding chapters) are imposing substantial change on the landscape of the Australian financial system.
For the purpose of its task, the Inquiry considers it unnecessary to predict precisely the future shape of the industry. To do so accurately would be impossible. Rather, it has confined its analysis to identifying the broad directions of change which are now under way.
Four broad changes are identified.
Key Findings
Increased competition will result in the rationalisation of pricing and costs. There will be no room in a competitive market for non-commercial mispricing. Competitors with high cost structures will also be forced to rationalise their operations in order to remain competitive.
The Australian economy and its financial system are now closely linked to international markets. Financial services participants in Australia face increasing competition from offshore providers and are simultaneously pursuing international opportunities themselves.
Increased conglomeration and further market widening will continue to challenge traditional institutional and regulatory boundaries. New competitors are also emerging from outside the finance industry. As competition intensifies, many firms will seek to specialise in those activities they perform best, causing the value chain to disaggregate. Alliances, joint ventures and outsourcing are likely to become commonplace.
Markets are increasingly challenging intermediaries for the provision of finance and the management of risk. Large corporations have had access to financial markets for some time, but developments in securitisation now