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European Banking Trend Radar

A structured process to identify, categorize, and monitor trends

The unprecedented situation since the COVID-19 pandemic hit Europe has once again highlighted change dynamics, with banks needing to adapt rapidly to new trends and drivers in the market. This has inspired us to set up a systematic process for trend monitoring and evaluation in banking to help market participants navigate uncertainty. In our new series of articles, we will shed light on the key trends and drivers in the European banking market.

Why does systematically monitoring trends in banking matter?

 

In a world that is constantly changing, market participants need to cope with uncertain future developments. The dynamics of change force companies to adapt rapidly in several dimensions, such as technological advancements, changes in culture and society, climate challenges, and economic developments. In the wake of the COVID-19 crisis, uncertainty increased even further. However, banks frequently struggle to adapt quickly and successfully to new developments since it is almost impossible to predict how the numerous and often interdependent trends and drivers will affect the market. Some benefit the banks, others disrupt business. 

The challenge of anticipating future developments and the impact on the market highlights the importance of systematically monitoring trends in banking. In this regard, our structured process aims to help banks to navigate uncertainty and to support them in defining future-proof business models.

Drivers of change in the banking market

 

In order to create a systematic process that is suitable for the European banking sector, we categorize the large number of trends into six main dimensions.

These dimensions reflect the main drivers of change in the banking market:

  • Clients
  • ESG
  • Regulatory and Political
  • Economics and Financial Markets
  • Technology
  • Company Organization

In a three-part series of articles, we examine each dimension in detail. 

Edition #3: Technology and Company Organization

 

The digital transformation of the banking industry is still ongoing, as new technologies continue to drive innovation. Digital payments are more popular than ever before, and they are evolving at a rapid pace. Besides that, cloud-technologies are driving an enormous transformation of banks' digital processes. Technological advances are also impacting the organizational structure of banks. The increasing threat of cyberattacks must be countered with a new and holistic understanding of security. Changes at the organizational level are also necessary to create an improved banking experience for customers or to benefit from a banking ecosystem strategy. A detailed analysis of all technology and organizational trends can be found in this edition.

Edition #2: ESG, Regulatory & Political, Economics & Financial Markets

 

The "green pressure" on banks is growing. Investors and regulators increasingly expect banks to contribute to an environmentally friendly society. New rules are continuously being developed and introduced to disclose unsustainable behavior or prevent it. This changing regulatory environment is transforming the industry and poses new challenges for banks. At the same time, the market environment is changing due to the implementation of the Capital Markets Union, intensified location competition and digital currencies. In the second edition of the European Banking Trend Radar, you will find out which other trends will bring about significant change in the near future.

Edition #1: The Client Perspective

 

Changing customer needs are one of the key drivers for change in banking. Therefore, our first article focuses on the client perspective.

Banks increasingly face new client behaviors and expectations, shaped by factors such as changing social values and expectations. Furthermore, higher affinity with digital and technological aspects shapes consumer preferences for everyday banking activities. New standards are emerging for financial services companies since customer centricity is a major competitive differentiator. Banks should therefore ensure that they provide the best seamless experience to their customers.

A structured process to identify, categorize, and monitor trends

 

Trend research is challenging since there is typically a plethora of trends and innovations to be monitored. Therefore, keeping track of the market and identifying those trends that are likely to have the highest impact on banking are complex tasks. By developing a systematic process to detect trends, recognize patterns, and evaluate them, we can monitor the development of banking trends.

This process can be divided into three steps.

  1. In the first step, we create a collection of relevant trends by screening a large  amount of data from a specific trend tool. Additionally,  selected group of internal experts contributes trends manually. 
  2. In the second step, a broader group of experts assesses these trends via a survey. The assessment dimensions include the strength of the influence of each trend in the future and time until mainstream adoption.
  3. In the third step, we generate a trend radar based on these results, which allocates each trend into one of three categories: watch, prepare, or act.

Have we aroused your interest? Then please do not hesitate to contact us. The Deloitte European Banking Trend Radar can also help you analyze the extent to which individual trends or macro-trends could impact the specific business model at your bank or financial services provider. We would be happy to work with you in conducting analyses on your organization.

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