New challenges and new opportunities for financial services
Financial organizations around the world are looking ahead. New challenges and new obstacles loom large, but as the global economy evolves, many new opportunities present themselves.
But first, the challenges. They include a host of new regulations aimed at reducing risks in the system; increasing capital reserves; growing revenue in recession-wrecked economies of mature markets; competing and partnering with non-traditional players; rebuilding trust across the global financial system; and, finally, competing to attract and retain increasingly demanding customers. Just to name a few.
With that in mind, the opportunities are there for those who want to change the conversation from one about problems to one about possibilities. The global economy is expected to show a growth rate of 5.8% compounded over the next 15 years. Global assets are expected to quadruple within the same time frame to $1,264 trillion1 and 2.5 billion unbanked or under-banked people worldwide constitute a large untapped customer pool.
Much of that movement will happen in emerging markets. A recent survey by the IBM Institute for Business Value (US) shows tomorrow’s banks must become more client centric by leveraging sophisticated insights to improve risk management, pricing, channel performance and client satisfaction.
Smarter retail banking
The banking industry has to fundamentally reorient their business models, by moving from product-centric silos to customer-centric strategies. See how it's done. Watch the video.
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Back to banking basics on the path to what's possible
Despite apprehension regarding economic and regulatory instability, the banking industry as a whole is innovating on several fronts: reducing business complexity, managing risk holistically,.and achieving customer centricity via advanced analytics.
Attendees from across the banking and financial markets at the 2010 Smarter Industries Symposium in Barcelona, Spain (US), identified three critical actions for banking and financial organizations to both meet the challenges of the marketplace and capitalize on opportunities:
Simplifying the business to achieve efficiency and agility
This includes renovating core banking and customer data systems to improve efficiencies .Driving a simplified and streamlined agile enterprise that balances growth, efficiency and business resiliency.
Focus on the customer
Until recently, banks did not pay sufficient attention to developing their existing customer base. However, the recognition is dawning that they have lagged other industries – especially retail – to optimize data and leverage analytics to cultivate client-centricity, build trust and drive profitable growth.
Balance risk management with innovation
Integrate risk management to achieve compliance objectives while mitigating operational risk, fighting crime and optimizing financial returns. Banks need to continue their focus on the innovation required to compete and grow while coping with the instability engendered by reform.
Register now to download The Smarter Industries reports (US) to read more about the results from the 2010 Smarter Industries Symposium.
Over the next few years, banks will need to rethink their strategies as they respond to the sweeping changes in their markets and the regulatory environment. Forward-thinking banks in both developed and growth markets control their fate. If they act quickly and efficiently, they can buttress their core businesses by rethinking their business model to dramatically lower the cost of running the bank while turning the data they already have into actionable insights to develop new products, address new segments and win in new markets.
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1 or 1.264 quadrillion - Economist Business Unit estimate, IBM Institute for Business Value