Global banking outlook 2014-15

Competition: old and new

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The competitive landscape involves new, non-traditional players as well as incumbent banks reshaping their operations.

In markets that remain over-banked, regulatory pressures are intensifying competition. Better-capitalized banks in Eurozone peripheral economies, for instance, are attracting deposits from their struggling rivals. At the same time, they are also able to borrow more cheaply.

EY - Total revenues from top 50 global banks, 2008-13

Domestic banks in emerging markets will likely face more competition in corporate banking and wealth management from two directions: regional banks looking to broaden their reach and global banks in search of growth.

Shadow banks

Regulation has been a catalyst for new trading exchanges and swap execution facilities, as well as more non-bank broker dealers.

Although these “shadow banks” may lose some of their advantage over time as they are scrutinized, traditional banks are right to be concerned. As traditional banks are distracted by regulation and remediation, shadow banks could take market share and shift the status quo.

Other competitive areas

We see four other areas where competition for customers will be especially active:

Payments
Regulation is already driving change in payments, as banks face restrictions on card transaction fees.

Current/checking accounts
Start-ups use new platforms and outsourcing arrangements to offer a fresh take on current/checking accounts.

Peer-to-peer (P2P) lending
As more asset managers establish loan funds, they may use P2P lenders as intermediaries to source borrowers instead of using banks.

Mobile money
Mobile money will see intense competition as technology and telecommunications firms enter the arena.

Loss of fees is one concern for banks, but the larger issue is the potential weakening of their relationships with retail customers and merchants. (See our report “The mobile money revolution is here.”)

Total revenues from top 50 global banks, 2008–13

EY - Total revenues from top 50 global banks, 2008-13

Source: bank reports, EY analysis. See note on page 29 for further information on methodology

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