Regulations: heads, you win; tails, I lose.

The proposals to update the Mifid directive governing European financial markets is just the latest in a slew of regulatory initiatives to hit the financial services market. The increase in regulatory attention in the financial markets is a global phenomenon, and shows no sign of abating in the foreseeable future. And given the backdrop of the current economic climate, it is no surprise that these regulatory imperatives are eating into the banks’ innovation budgets.

Innovation obviously implies a change for the better, and that is only achieved by investment. There is a general air of disillusionment surrounding financial institutions at the moment, and that can quickly translate into actual dissatisfaction at the point of service. That is especially the case in payments, which is one area where the banks are actually seen to be doing something with the customers’ money.

To counter that, banks should continue to invest and innovate in their payments business. Payments system transformation can enhance bank and customer relationships, as well as create new revenue streams, both of which should be high on the list of priorities of any bank. The regulations will continue to come – that is no excuse for inertia.