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Fifth annual program in the Salzburg Global Forum on Finance in a Changing World opens
Bankers, policy makers, regulators, supervisors, financial and technology consultants will convene in Salzburg this week for the fifth annual program of the Salzburg Global Forum on Finance in a Changing World.
The accelerating transformation of the financial services industry, and the emergence of alternative financial intermediaries, have profound medium- and long-term implications for global financial markets and their supervision.
Financial intermediaries who channel funds from investors to people and institutions who require capital have expanded far beyond the traditional banking sector in recent years and now exert growing influence on global financial markets. Such entities encompass investment banks, broker-dealers, life insurance companies, mutual and pension funds, mortgage finance, credit card companies, and other types of shadow banks, all of which operate in different ways and at different scales, often with strong regional variations. Alternative channels to traditional market- and bank-financing are now major sources of funds in both developing and developed economies.
This increasingly diverse global marketplace for financial intermediation – coupled with ongoing reexamination of the role of traditional intermediaries in the wake of the financial crisis – raises important societal issues. These include the duties financial intermediaries owe to those with whom they transact business; whether banks can meet the rapidly developing needs of their traditional customers; the future of fair and effective markets; the continuing challenge of shadow banking and securitization; and the tension between societal notions of fairness and economic notions of efficiency.
From a regulatory and supervisory standpoint, as financial markets struggle to fully recover from the 2008 crisis, the imperative to strengthen the safety and soundness of intermediaries by tightening international and domestic prudential standards (as embodied in Basel III, the Dodd Frank Act and various European Union and other initiatives) may increasingly conflict with the macroeconomic priority to restore growth. As a result, understanding the new dynamics of financial intermediation, and how they influence global markets, will be critical for future resilience, credit flows and the sustainability of the financial services industry.
From a technological point of view, new and potentially disruptive innovations, cyber-security risks, privacy concerns about data protection and data theft, and new types of financial crime, present difficult challenges for future regulatory action in an interconnected and borderless financial services marketplace. Assessing the potential impact of these trends on market structure, secondary market trading, and raising funds in the capital markets, as well as the scale of investments required by banks to keep pace with new technologies and the constraints the latter will place on traditional intermediaries, are matters of increasingly strategic concern.
Leading voices across the financial services sector are starting to confront the magnitude of these emerging challenges and their potential to radically alter relationships along the transaction chain.
Tackling all these issues, The Future of Financial Intermediation: Banking, Securities Markets, or Something New? will open on Tuesday, June 30 by examining the capital markets union in Europe and international regulatory action and market implications. Further panels over the three day program will cover the future of financial intermediaries; innovation, technology changes and security issues; and governance and compensation reforms. The program also includes in-depth working group discussions and the now-traditional evening debate, the topic of which for this year will be “Resolved that the universal banking model and traditional intermediation are outdated, broken and not worth preserving.”
This year’s program will be chaired by Roger Ferguson, president and chief executive officer of TIAA-CREF and former vice chairman of the U.S. Federal Reserve’s Board of Governors together with Axel Weber, chairman of UBS and previously president of the German Bundesbank between 2004 and 2011. Speakers include regular contributors to the annual Forum including Andreas Dombret, Member of the Executive Board, Deutsche Bundesbank; Douglas Flint, Group Chairman, HSBC Bank Plc; Wim Mijs, Chief Executive, European Banking Federation; and Sandra O’Connor, Chief Regulatory Affairs Officer at JPMorgan Chase & Co. Speakers also include Sandra Boss, External Board Member of the Prudential Regulation Authority at the Bank of England, and Ricardo Moreno, Head of Global Engineering at BBVA.
The Future of Financial Intermediation: Banking, Securities Markets, or Something New? is part of the multi-year program Salzburg Global Forum on Finance in a Changing World. This year’s program is in partnership with Barclays, Deutsche Bank, Ernst Young, HSBC, JPMorgan Chase & Co, and Oliver Wyman, with co-sponsors Cleary Gottlieb, the Cynosure Group, Davis Polk, and Dynex Capital.