People did not see the credit crisis tsunami coming. The attitude in the markets reflected a 'party until the music stops' approach to the financial system.

These were the sentiments that set the ball rolling on a lively debate at the Capgemini Credit Innovation Forum in April this year.

The event was part of the annual Innovation Forum series that takes place in our Accelerated Solutions Environment (ASE). Business leaders and creative thinkers came together to develop new ideas and innovation in credit and to explore possible new operating principles and models.

They discussed their views of the market for 2011 and beyond. What would the format of credit be in the future? To what extent would government have taken operational ownership of the industry? What would the new financial architecture look like?

Among the theories put forward was that volumes in the credit markets would decrease until the next innovation in the market. The next innovative product was likely to find loopholes in the regulation and the next boom would start again.

One group of delegates predicted a lot of de-merger activity in 2010, for example the separation of retail bank from the investment bank. They believed that by 2011 the industry would become more stable and there was a likelihood of a return of some financial conglomerates, although not to the same extent as 2009.

In terms of supply-side dynamics, the question of how to raise money would go back to the 'old style' relationships, thereby the borrower would stay with the lender until maturity. This would involve more initial credit analysis and 'know your client' strategies.

And what of credit levels? These would never return to the previous cheap levels. Having shot up at the height of the crisis they would stabilise to a more reasonable level.

For more details please contact David Royle at
David.Royle@capgemini.com
+44 (0)870 366 0644

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