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Global Banking Industry Outlook

Growth Solutions in a Changing World


Global Financial Services Industry Outlook (cover)

Our Global Banking Industry Outlook: Growth Solutions in a Changing World report finds that while issues like risk management and regulatory compliance remain a challenge, there are a number of opportunities for growth – particularly through globalization and expansion into new markets, innovative technologies to improve service delivery for the customer and new investment products to meet the needs of retiring baby-boomers.

The five issues to watch

  • Globalize and consolidate

    Crumbling cross-border investment barriers have presented large banks with the opportunity to expand abroad relatively freely by acquiring or merging with banks in other countries. Many national markets are already dominated by a handful of large banks. New growth will come from cross-border expansion into both developed and emerging markets. Global banks may realize significant economies of scale from their size and geographic spread, but local and regional institutions will remain powerful competitors in many markets.

  • Reconnect with the customer

    Facing slow growth in many existing markets, banks are seeking to reconnect with retail customers through a combination of technology and personal service. A full 42% of banks surveyed identify technology as a top driver of profits over the next three to five years. Six of 10 banking industry respondents believe the greatest effect on profits will come from technology-enabled products and services. Nearly four of 10 (38%) cite the use of technology to build strategic alliances with customers, partners and other stakeholders.

  • Promote compliance

    Regulation is second only to globalization as a transformative issue for banking over the next three to five years. Half of the banking industry survey respondents see regulation as one of the top influences on profits. Within regulation, more than eight out of 10 respondents (82%) cite the implementation cost of compliance as having the greatest impact on profits. Nearly half (48%) see the risk of non-compliance as a top concern, and 46% cite the challenge of finding and training the right people.

  • Better manage risk

    Risk is ranked among the top transformational issues over the next three to five years by four of 10 banking industry survey respondents. Banks view operational and reputational risk to be greater concerns than market, credit and liquidity risk, which they are generally able to manage more effectively.

  • Adapt to demographic shifts

    Finally, impending demographic changes are seen as a key profit driver, cited by a third of survey respondents. The greying of much of the world’s population will soon shift target customers from wealth accumulation to a lengthy retirement. At the same time, responsibility for retirement security in many markets is moving from the government and employers to the individual.

  • About the report

    The Global Banking Industry Outlook, which was developed in conjunction with the Economist Intelligence Unit, is based on a survey of 175 board members and global executives across the financial services industry, of which 50 were from the banking industry. Based on our findings and our client experiences, we believe that the issues identified within this report will have the greatest impact on banks as they approach 2010. Retail and commercial banks, thrifts, credit unions, mortgage banks, foreign banks, credit card companies and finance companies should embrace the imperatives outlined in this report to achieve long-term success.

    Read more on our research into the future of the banking industry and examining other ways in which banks can sustain growth in a changing and dynamic world in the report below.

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