According to a report launched today by Deloitte, the business advisory firm, by 2010 financial services providers will face a major challenge to their business model from globalisation.

The report, based on interviews with CXOs of the world’s 175 largest financial services organisations, studies the top trends, challenges and opportunities facing financial services providers and encourages organisations to rethink their growth strategies.

Globalisation is expected to have the largest impact on profits in financial services across the next three years, with 65% of CXOs highlighting globalisation as the biggest issue facing their organisation.

Yet in spite of the evidence and the acknowledgement that globalisation tops the agenda, only 21% of CXOs believe that their institutions will derive over 50% of their income outside of their home markets by 2010.

Commenting, Andrew Power, partner in financial services at Deloitte said: “The fact that four out of five of the largest financial institutions believe they will continue to principally operate in their home country suggests many are paying only lip service to globalisation. As a result those truly committed to globalisation are likely to forge ahead and open up a huge performance gap to the others.

“Growth levels in emerging markets should top 20 percent for many financial institutions. Financial services are entering a new era of more international markets and the major challenge for leaders is to reshape the profile of their business. Emerging markets provide the best opportunities to generate sustainable growth for the business.”

Other findings

• Retirement savings - Worldwide retirement related assets could reach nearly $25 trillion by 2010. The ‘silver hair’ market should create tremendous opportunities for the industry.
  
• Falling payment revenues - Most financial institutions are likely to suffer a fall in revenue from payments of 20-30 percent. Payments are often viewed as the unglamorous side of financial services, but they are likely to take centre stage by 2010. Financial institutions should make a strategic decision to invest in the payments business – or get out of it by outsourcing.
  
• New assets - By 2010 between 75 and 80 per cent of institutional investors will likely be investing in new asset classes. Capital market firms may need to inject more of a funds type thinking into their business to give investors better risk/reward options.

Ends

About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP which is among the country’s leading professional services firms, providing audit, tax, consulting and corporate finance services. Known as an employer of choice for innovative human resources programmes, it is dedicated to helping its clients and people excel. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities.  Neither DTT nor any of its member firms has any liability for each other’s omissions.  Services are provided by member firms or their subsidiaries and not by DTT. 

Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority. 

The information contained in this press release is correct at the time of going to press.