It’s all cycles. When something goes to far in one direction, it suddenly stops, and goes back. Its natural and it’s actually quite predictable.
When you’re in politics (I assume, since I’m not a politician) your agenda always have intended outcomes and unintended effects. I guess that – as a sensible politician, you try to maximise the outcome that was originally your intention, and minimise the unintended ones. Rather straight forward.
During the period after 2008, when the last financial crisis erupted and shed its toll of banks and bankers, there has been a barrage of regulations forced upon the financial sector. It even seems to have escalated during the last couple of years.
At some point there will be a peak situation. It’s inevitable. When the burden of regulations become to great, basically, at the point when the negative effects are greater than the intention, leading to the opposite effect it was once indented to have, it will force a reaction of some kind.
One thing might be that regulations are raising the already high bar for entering the industry and consequently hindering new entrants. This eventually, will be bad for customers as less new entrants can drive competition in the sector. The large organisations with the ability to quickly adapt to new regulations will become even bigger.
It also forces larger institutions to automatize client relations that leads to less compliance risks, which is good but also as a consequence, to a declining need for staff.
The new strategic imperative for large corporations that are affected by regulations is to simultaneously turn them into business opportunities. As it hits equally, the ones who can leverage and extract more value and create new business ideas from the new reality will be a winner.
Also, another strategic advantage will be political intelligence – meaning, the ones who can anticipate future regulations create a benefit in having more time to adapt.
If it hasn’t started to happen already – at least I haven’t seen it – a pretty interesting idea is to apply software to do three things;
- Map and analyse potential upcoming regulations and its likelihood
- It’s implications, and the best possible response.
- Scenario planning and business engineering/modelling to analyse opportunities
All powered with AI and machine learning of course.