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This chapter assesses the factors that appear to be driving the structural reconfiguration of the financial services sector and its competitive consequences. Strategic options that are open to financial firms in responding to–and anticipating—structural change are then examined, as well as the factors that seem to drive competitive performance with respect to market share and profitability. Few industries have encountered as much “strategic turbulence” in recent years as the financial services sector. In response to far-reaching regulatory and technological change, together with important shifts in client behavior and globalization of specific financial intermediation functions, the organizational structure of the financial services industry has been profoundly displaced, and a great deal of uncertainty about the nature of any future equilibrium in the industry’s contours remains.

This introductory chapter begins with a brief discussion of the emergence of a new era of global banking and insurance. It outlines five of the reasons to study the financial services industry. It then describes the structure of the book. The book provides an overview of how expansionary strategies of financial services firms are impacted by globalization and discusses performance drivers during internationalization processes. It explores and challenges conventional assumptions from the international management literature on topics such as the limits of international expansion, the importance of cultural and institutional distance, the nature of economies of scale and scope, the existence of first mover advantages, the logic behind the global value chain configuration, the speed and timing of market entry, and the organizational architecture.

This chapter provides an overview of U.S. criminal enforcement actions against global banks, including aggregate statistics about their targets and the penalties levied. It then examines the characteristics and motives of the principal actors involved: the global banks themselves, the regulatory agencies that supervise them, and the prosecutors who brought criminal cases against them. The chapter develops the book’s three central arguments, which structure the case studies examined in the following chapters. First, it argues that prosecutors bring to global bank oversight a set of priorities, incentives, and tools that differ fundamentally from those of the specialized agencies and transnational networks that traditionally occupied that field. Second, it contends that the U.S. government’s ability to impose its will on global banks stems from its control over vital hubs of the international financial infrastructure, such as the U.S. dollar and U.S.-based payment systems. Third, it argues that although U.S. enforcement actions have triggered complaints of unilateralism and can in some cases be self-interested, they can also unlock obstacles to international cooperation and lead to widespread benefits.

Historical summary of the growth of international banking since the ancient world (“One could make money on money long before Alexander the Great”), and identifying the historical legacy that has nourished the roots of modern banking institutions and methods.

This introductory chapter provides an overview of the link between cross-border banking and domestic policy. Every country in the world relies on bank-to-bank networks for some type of commerce, and it is this near-universal dependence that makes it a uniquely powerful tool of pressure. Countries may be able to forgo foreign investment or sell bonds to domestic markets, but governments cannot afford to be cut off from the global banking community. For this reason, bank networks and operating practices can have profound effects on the domestic policies of states. The chapter describes the Financial Action Task Force's (FATF) noncomplier list, which showcases the power of globalized finance. By avoiding sanctions or direct coercive action, the FATF's noncomplier list preserves a veneer of bureaucratic authority and technocratic monitoring that protects it from easy critiques. The book continues furrther to examine the effects and implications of this unofficial market enforcement process.

This chapter examines the consistent criticisms that have been made of capitalism over two centuries and that continue to be made. They have damned capitalism as a conspiracy of the powerful; as the mindless enemy of mindful reflection; as the destroyer of true value, whether in nature or culture; as the enemy of community and social bonds; and as being against life. This last point shows just how different capitalism is from the market. Where markets are full of life and social interaction, the places where capitalist power is most concentrated can be the opposite of life. Dull and soulless central business districts, automated factory production lines, or the grimly abstract headquarters of global banks embody an aesthetic that runs counter to the vibrant, variegated patterns of living things like forests or coral reefs.

Collateral sets the stage by introducing the lawyers and the documents in the back offices of derivatives units of global banks to consider what kind of knowledge and forms of subjectivity are being produced under the guise of “collateral.” The main function of collateral is to hold back risk, which simply means to place limits on the indeterminacies associated with social, political, economic, and temporal relations. How does collateral accomplish this? Collateral is sometimes a legal theory, sometimes a material object, sometimes a person, and sometimes an institution. In each case, however, collateral is a set of routinized knowledge practices. This chapter explores the role of these routinized practices in resolving or at least obviating the complex political and epistemological questions that surround derivatives trading. But rather than a smoothly oiled machine, collateral when seen from up close emerges as an assembly of glitches, of mistranslations, misunderstandings, and redundancies.

This chapter talks about Ron Kalifa, who was working at the Royal Bank of Scotland (RBS) with a mission to turn the group created by disgraced banker Fred Goodwin into a payments powerhouse when the financial crisis hit. It cites public company Worldpay's merge with an American rival, Vantiv, which acquired a huge portfolio of new American clients and became one of the biggest payments providers in the world. It also describes the rise of Worldpay out of the embers of the financial crisis as a parable of how Britain's leadership as the originator of the financial technology that now drives the global banking system. The chapter looks at the acumen and trading skills that made the City of London the biggest exporter of financial services on earth and is now turning it into a fintech champion. The Worldpay saga says a great deal about the skill set and culture that has made financial services the most valuable wealth-creating sector of the UK economy.

This concluding chapter summarizes the theory's core argument about focal points, unofficial market enforcement, and compliance. It discusses the book's theoretical and empirical contributions and explores the broader policy implications of the research project. The chapter also, however, considers a competing narrative of the Financial Action Task Force's (FATF) actions as a normative judgment, by powerful countries, that stopping criminals and terrorists should be prioritized over the goals of financial opportunity and inclusion. The world's largest economies and financial centers are using monitoring and the global banking system to export their rules globally. If the process of diffusion leads to policy change but stagnates growth in the least-developed states, it may be worth asking if the current approach is really a success.

This chapter summarizes the findings of the case studies examined in the previous chapters and discusses their implications. The cases support the conjectures proposed in the introduction. Consistent with the differences in incentives and capabilities between regulators and prosecutors, the latter repeatedly provided robust enforcement against harmful practices by global banks that had not been effectively addressed by the former. Their ability to do so was buttressed by U.S. control over the international financial infrastructure, such as access to U.S. dollar payments, and the country’s leverage over global banks that rely on that infrastructure. Although banks and foreign governments often complained of U.S. unilateralism, in two cases—benchmark manipulation and tax evasion—U.S. enforcement actions led to substantial and widely beneficial international reforms. These conclusions challenge the widespread notion that U.S. enforcement actions against global banks are ineffective due to the “too big to jail” problem. They also qualify arguments to the effect that explicit deployment of U.S. structural power over international finance to achieve policy goals necessarily threatens to erode U.S. centrality in international finance.