2019 Banking Industry Outlook

Optimism for banking and capital markets

There’s a new kind of promise in the banking industry—and possibly no better time than now for transformation. Economic fundamentals are strong, the regulatory climate is favorable, and transformation technologies are more readily accessible, powerful, and economical than ever before.

There appears to be a new kind of promise in the banking industry. We urge banks not to become complacent. The economic/credit cycle is bound to turn at some point. Use recent fortunes to invest wisely, and pursue change with clarity and conviction.

  • A new era of global regulatory divergence
    Last year, we predicted a stabilization on the regulatory front and the trend has been on track. Growing divergence in global regulatory standards continue to be felt in 2019.

    As countries look for ways to spur economic growth, many are increasingly showing a willingness to take a fragmented approach. In the APAC region, conduct and culture were high on the regulation agenda in 2019. China's banking regulators issued extensive guidelines on employee conduct management. Above all, the historic step to merge banking and insurance watchdogs might help Chinese regulators better tackle the mounting risk in tis financial norms.
  • Creating a symphonic enterprise in technology
    Bank's success in digital transformation will ultimately depend on how strategy, technology, and operations work together across domains. We refer to this as a "symphonic enterprise", where different technologies and solution are seamlessly meshed to create maximum value. To achieve this, excelling at data management, modernising core infrastructure, embracing AI, and migrating to the public cloud should take precedence in 2019.
  • Strengthening the core with new-age risk defences
    The risk management function within banks appears to be entering a new stage in its evolution, as digitization, automation, and externalisation gain ground. Banks in recent years have made notable advances in how they assess and mitigate risk across the enterprise. However, current systems may be less equipped to manage emerging risks, for example, algorithms that enable smart decisions, AI, increased connectivity with third-party providers and the potential for increased cyber risk.

In a nutshell, this report looks at the state of the industry, the imperative to transform, and our expectations this year in seven primary business segments: retail banking, corporate banking, transaction banking, investment banking, payments, wealth management, and market infrastructure.

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