Global Securities Industry Outlook
Connecting the Pieces in a Changing World
Our Global Securities Industry Outlook: Connecting the Pieces 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 both institutional and retail clients and new investment products to meet the needs of retiring baby-boomers.
The five issues to watch
Globalize and localize to boost revenues and cut costs
Over the next three to five years, large securities firms will face an imperative to tap into fast-growing markets to boost revenue, while simultaneously offshoring IT, business processes and other functions to reduce costs.
Adapt technology to improve service delivery
Securities firms can strengthen ties with customers by harnessing technology and innovation to provide better service and delivery. Just over a third of securities firm respondents identify technology as a top profit driver over the next three to five years. Fiftynine percent cite technology-enabled products and services; 46% cite growth in processing power and 30% cite technology required to build strategic alliances with customers, partners and other stakeholders.
Increase compliance effectiveness
Expanding regulations, overlapping mandates and tighter enforcement worldwide continue to raise the cost of compliance and increase the consequences of noncompliance. Securities industry survey respondents ranked regulation second only to globalization as a transformative issue in the years ahead. Fifty-seven percent of the securities industry executives responding to our survey cite regulation as one of the main influences on profits over the next three to five years. Within the category of regulation, three-quarters of securities industry respondents say the implementation cost of compliance is a top concern, and seven out of 10 focus on the risk of non-compliance. A third see finding and training the right people as a major issue.
Enhance risk management
Securities firm executives are increasingly aware that reputational problems can irreparably damage their business yet feel it is the most difficult risk to manage. Having clear direction from the top and a crisis management plan in place that facilitates communication is seen as critical. Most of the executives interviewed believe that reputation is critical to success – and that it needs to be managed throughout the business rather than solely through the public relations department.
Adapt to an aging population
As a result of declining birth rates and longer life expectancy, wealthy countries will increasingly have more old people and fewer young. In addition, as the baby-boomers retire, the ranks of the middle-aged will also dwindle. Between 2000 and 2050, the percentage of America's population over the age of 65 will grow from 12% to 21%, while the share of the population aged 40-64 will fall from a peak of 33% in 2010 to 28% by 2040. In Japan and some European countries, the shift will be even more dramatic.
About the report
The Global Securities Industry Outlook is based on a survey of 175 board members and global executives across the financial services industry, of which 38 were from the securities industry. Based on our findings and our client experiences, we believe that the issues identified within this report will have the greatest impact on securities firms as they approach 2010. Broker-dealers, investment banks, electronic communications networks and exchanges should embrace the imperatives outlined in this report to achieve long-term success.
Read more on our research into the future of securities industry and examine other ways in which securities firms can sustain growth and connect the pieces in a changing and dynamic world in the report below.
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