Banks’ payment services, brokerage and asset management fees and even interest income are being tested by FinTech companies. Regulatory changes are a second structural shift to which banks need to adjust. Recent reforms have increased capital and liquidity buffers; the new resolution and liquidation regime requires a large volume of liabilities with high loss absorption capacity.
Furthermore, banks must also comply with additional requirements, such as those on anti-money laundering and consumer protection. The new Markets in Financial Instrument Directive (MiFID2) will enhance consumer protection, but at the same time it will increase the burden of compliance. The benefits of these regulatory changes are clear: banks are safer than in the past.