Global banking outlook 2014-15

Business model: redefined

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We expect to see dramatic changes in the banking landscape, particularly regarding alliances and other partnerships, as universal banking is redefined. Driven in part by these alliances, we envision seven potential banking models:

  • Genuinely global
    Truly international in coverage and product depth, though less full service and globally universal than pre-crisis
  • Selectively international
    Presence across global financial centers, but restricted product range outside home and other core markets
  • Strong regional
    Major business lines across multiple countries within a region, focused on key customer segments elsewhere
  • Solid national
    Full-service “universal” offering in home market, increasingly limited operations internationally
  • Local retailers
    Small and mid-sized domestic banks serving retail and business customers, primarily within part of home country
  • Focused specialist
    Core focus on particular segments including wealth manager, broker dealer, niche investment bank and credit cards
  • Innovative disruptors
    New entrants leveraging technology and exploiting evolving industry landscape

Regulation as inspiration

Banks will continue to exit business lines and geographies as they streamline operations and strengthen balance sheets.

One major consequence will be a reduction in the number of genuinely global organizations and the emergence of strong regional institutions in Africa, Asia and Latin America. (See our report on banking in emerging markets, including a close look at 10 rapid-growth markets.)

Collaboration as a choice

Institutions will look to harness their strengths, recognizing they might not be able to satisfy every customer demand single-handedly.

A collaborative strategy will suit many banks. Even genuinely global banks will choose collaboration over organic growth or full-scale acquisition in some markets.

The “focused specialist” model cited above is one example where partnerships play a big role. Some new entrants into banking, including retailers, also have a collaboration-centric model. They focus on the front-end relationship with customers and contract with banks to provide other functions and services.