Institutions face increased competition from each other and from non-traditional new entrants — those banks unable to adapt in time will be at risk.
Markets may have staged a strong recovery in the first few weeks of 2012, but the future for the global banking industry remains in doubt, clouded by economic and regulatory uncertainty.
2011 didn’t turn out quite as planned for the global economy or for the banking industry. Anticipated opportunities for bank growth didn’t materialize while consumer and business activity mostly failed to recover. At the same time, legislators and regulators were unable to deliver much-needed clarity and consistency while the public perception of banks continued to plummet. Competition stepped up, including from each other and other financial services providers, such as from “shadow” banks, technology companies and major retailers.
For all these reasons, banks may be tempted to watch and wait, which may be a mistake as the rate and extent of the slowdown varies significantly across industry sectors and geographies.
Our outlook suggests that to forge ahead and remain competitive in the next 12 to 24 months, global banks must consider the following:
- A renewed focus on customers – the right customers – will play well for banks.
- Understanding which products/services to develop will be key to success.
- Technology will be an enabler and differentiator for banks that get it right.