May 5-7, 2004 how do banks compete? Strategy, regulation, and technology
The 40th annual Conference on Bank Structure and Competition will be held May 5-7, 2004, at the Fairmont Hotel in Chicago. Since its inception, the conference has fostered an ongoing dialogue on current public policy issues affecting the financial services industry.
This year’s conference focuses on how financial institutions compete–the strategies they use, and the central roles that technology and regulation play in the formation and implementation of those strategies. Over the past two decades, commercial banks have aggressively repositioned themselves to compete under new conditions. No longer protected by regulatory entry barriers, and confronted with sea changes in telecommunications and computer technology, banks and other financial institutions have invested huge amounts of resources in the search for new competitive strategies. The most successful of these innovations have set new competitive standards for the industry. The manner in which commercial banks currently underwrite their loans, finance their activities, expand their franchises, distribute their services, and market their images would be barely recognizable to a banker from the 1970s.
Regulation, however, continues to shape the way banks compete. Strategies and innovations are often driven by, and in some cases succeed because of, the regulatory environment. Federally insured deposits are a cornerstone of the community bank business strategy. Portfolio investment decisions are influenced by capital regulations, and Community Reinvestment Act (CRA) loans are a requirement for any bank that wishes to grow by acquisition. Statutory limits on national market share will require the very largest banks to deemphasize growth via acquisition and reemphasize internal growth. Our system of multiple regulators and bank chartering agencies can affect the organizational form that banking companies choose. Terrorist threats and governance scandals have led regulators to make increased demands on banks for information.
Similarly, technological advances both accommodate and constrain the competitive strategies of banks. New financial technologies have dramatically altered the way mortgage loans and consumer credit are produced, but these impersonal, transactions-based approaches to retail lending can leave banks at a disadvantage at raising core, relationship-based deposits from households. Information and communications technologies have created new strategic possibilities for delivering retail banking services, but while electronic delivery of financial services can substantially reduce banks’ overhead costs, abandoning bank branch offices can alienate core customers. New financial instruments have transformed risk-management at large commercial banks, but in application these new techniques have created unforeseen risks.
As in past years, much of the 2004 conference will be devoted to the main conference theme, but the program will also include additional sessions on other issues important to the financial services industry. Here are some of the highlights of this year’s conference:
* A Thursday keynote address by Federal Reserve Chairman Alan Greenspan (live, interactive presentation via satellite).
* A Friday keynote address by U.S. Treasury Secretary John W. Snow.
* The conference theme panel on “How Do Banks Compete?” Scheduled panelists include:
* J. Alfred Broaddus, President, Federal Reserve Bank of Richmond;
* Leslie M. Muma, President and Chief Executive Officer, Fiserv, Inc.
* Mark W. Olson, Governor, Board of Governors of the Federal Reserve System;
* David Rhodes, Senior Vice President, Boston Consulting Group; and
* Douglas W. Roeder, Senior Deputy Comptroller for Large Bank Supervision, Office of the Comptroller of the Currency.
This year’s conference will also include special panel discussions on innovative competitive strategies in banking, and the appropriate scope and regulation of government-sponsored enterprises (GSEs)in mortgage markets. Scheduled panelists include:
* Franklin D. Raines, Chairman and CEO, Fannie Mae;
* Edward B. Rust, Jr., Chairman and CEO, State Farm Insurance;
* James H. Hance, Jr., Vice Chairman and CFO, Bank of America;
* William Poole, President, Federal Reserve Bank of St. Louis;
* Joseph D. Reid, Chairman and CEO, Capitol Bancorp;
* Alex J. Pollock, President, Federal Home Loan Bank of Chicago; and
* Susan Wachter, Professor, University of Pennsylvania.
As in past years, the Wednesday sessions (May 5) will showcase more technical financial research that is of primary interest to research economists in academia and government. The Thursday and Friday sessions (May 6 and 7) are designed to address the interests of a broader audience.
Additional information about the conference program, registration, and hotel accommodations is available at our website at www.chicagofed.org. If you are not currently on our mailing list, or have changed your address and would like to receive an invitation to the conference, please contact:
Ms. Regina Langston
Conference on Bank Structure and Competition
Federal Reserve Bank of Chicago
230 South LaSalle Street
Chicago, IL 60604-1413
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