Basel Ⅲ in 2010 remedied the regulatory capital and liquidity failures. The swaption theory of corporate security valuation is applied to the contingent claims of a regulated bank. This thesis examines how capital regulation affects a bank’s performance (default risk) and how this effect varies across technology choices (human resource investment relative to information technology investment) that occurred in the return to retail banking. We have two main results. First, a backward technology, an increase in the human resource investment relative to the information technology investment, decreases the default risk in the bank’s equity returns. Second, the positive effect of capital regulation on the bank default risk is less significant when the bank chooses a backward technology than an advanced technology. Technology and regulation as such adversely affect the bank survival probability of the return to retail banking.