Global banking outlook: 2013-14

Creating a new product mix

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In equities and fixed income trading, scale is king, and top-tier banks will benefit from the retreat of mid-tier competitors.

The dilemma for many banks, particularly in developed economies, is which business lines, products and services to cut without jeopardizing future revenue when growth returns--or ceding opportunities to competitors.

Although not ideal, third-party agreements or partnerships could be a solution to maintaining full-service capabilities. Some organizations will also continue to hedge their bets and accept short-term losses in the hope of higher profits later.

For 2013-14, banks will likely focus on reviewing key clients lists and revising customer acquisition/retention targets. In equities and fixed income trading, scale is king, and top-tier banks will benefit from the retreat of mid-tier competitors.

In businesses such as M&A advisory, where scale is less important, specialists will continue to find a niche. Smaller organizations are also less likely to face issues around potential conflicts of interest. Peer-to-peer lenders and alternative providers in the small and medium enterprise loan space will continue to grow.

Wealth management will be a strong opportunity, and competition in premium banking will intensify as more banks woo affluent customers. And as low interest rates compress margins, successful banks will introduce more fee-based products and services.

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