While the credit crisis has created an unstable environment for the global banking industry, opportunity exists for those that seek to overhaul their business strategies, systems and processes.   According to the "Global Banking Industry Outlook – Mid-Year Update 2008" recently published by Deloitte, an integrated risk management approach, innovative branch strategy and effective talent pipeline are some of the key areas that banks should focus on for future growth.

Mr. Norman Sze, Managing Partner of Deloitte Consulting in China, said, "The banking industry weathered turbulent times in 2007 and early 2008.  However, the full impacts of the credit crisis are still emerging, creating tremendous challenges for the banking industry over the short and long term as it pursues sustainable growth.  Forward-looking banking executives shall take a fresh look at the industry and seek fundamental changes at all level of the organisation, from its client, service and people strategy to its processes and infrastructure."

"Increased regulatory oversight is also very likely, as regulators seek ways to encourage more forward-looking risk management techniques ", according to Mr. Gerry Schipper, leader of Deloitte's Banking & Securities practice in China.  "At the same time the roles of the regulators and the rating agencies are also under scrutiny.  Banks and other financial institutions in Asia should play a proactive role in shaping the debate about a future regulatory landscape"

The "Global Banking Industry Outlook – Mid-Year Update 2008" provides insight about banking industry trends through a review of critical issues, an examination of core fundamentals and an analysis of underlying factors.  Key findings from the report include:

• The credit crisis emphasized the need for banks to upgrade their risk management, especially credit and liquidity risk.  Banks will need to employ more sophisticated tools and resources to assess their risks.  Asset valuations are under intense scrutiny.
• Branches have and will remain an important channel and a means to strengthen customer relationships.  Banks need to fundamentally rethink their branch strategy, developing the next-generation branch as a centre for advice, sales and lasting customer relationships, not just a place to conduct transactions.
• Having an effective talent pipeline is especially critical in the face of a growing talent shortage.  It is important for banks to keep the best talent throughout the whole organization as well as at the upper management levels ensuring that robust succession plans are in place.
• Compliance requirements have increased substantially in scope and complexity and it is likely that this trend will continue over the coming years.  It is therefore vital for banks to take an integrated enterprise-wide approach to compliance requirements that will help boost efficiency and improve risk management.
• Banks need to do more than simply reacting to the sustainability issue.  They should take a long-term approach to sustainability, addressing everything from their own operations to their lending and investment policies.
• Now is the time for banks to act by consolidating and upgrading their payment systems such as those related to credit card and retail banking.  It will help reduce costs and operational risks while increasing payments efficiency if payment hub architectures are properly created.
• Setting up service-oriented architecture (SOA) is more than simply an IT strategy.  It helps to integrate and streamline the IT landscape, modernize business capability using technology as opposed to making the capability fit within the constraint of technology.