Digitalisation has introduced fintech companies as new competitors, and the banking landscape in general is still characterised by overcapacities. This increases competition and depresses margins. European banking supervision – a comprehensive treatment plan Banks have become more resilient, but they do operate in an environment that is characterised by constant change and constant competition.
If the bank doesn’t do this, it cannot make a market rate of return on the regulatory capital of 8 percent on the loans. Regulatory arbitrage, from the perspective of proper resource allocation, can be a good thing.