The major changes that will transform the industry
For several years, the banking industry has been undergoing a profound transformation. The regulatory pressure, the competitiveness and the evolution of the macroeconomic context are forcing financial institutions to question themselves. The business model is becoming more complex with the corollary of having to react to external factors. All businesses have been impacted (retail banking, investment banking, investor services, asset management, risk management, IT etc.) at different levels and it is necessary to manage the complex interconnections within the bank.
The first structural element is notably the regulatory environment. No sector has faced so much change in regulations in such a short space of time. The regulation, which aims to strengthen the resilience of the players, resulted in a heavy compliance workload. Without attempting to give an exhaustive list, we suggest that readers of The Banking Review explore EMIR, the NSFR and Target2-Securities (T2S).
The second topic is focused upon the distribution and marketing model. New technologies require bankers to rethink their distribution channels. The recent boom of Social Media has reshaped consumers’ lives and behaviour while the proliferation of smartphones has further contributed to the gamification that is gradually being introduced by financial service firms.
Furthermore, the traditional business model must continue to evolve in order to become safer, more efficient and more reactive to macro-economic factors. Within the banking sector, ransaction Cost Management (TCM) can help organisations to significantly reduce their costs. While some challenges are globally relevant, others are more continentspecific. European retail banks need to address the important role that active migrant workers and entrepreneurs will play in maintaining GDP growth, while Chinese Banks need to focus on their international presence.
Within this review, we explore and address these topics in a very practical way to give you an insight into the major issues affecting the banking industry.