2015 Banking Outlook

The U.S. banking industry is entering a new phase in its post-crisis journey, with a much sharper focus on boosting profitability. In this outlook, we highlight seven areas that banks will need to give their full attention, ranging from balance sheet efficiency to cybersecurity.

See below for a high-level overview of the seven trends and key priorities for the banking industry. For the full view into the expected banking trends, download the report.

This outlook is part of Deloitte’s Financial Services Industry Outlooks series which provides insights and trends for banking, insurance, investment management, and commercial real estate. The full series will be available in January 2015.

Balance sheet efficiency

Amidst a deluge of regulatory and market forces, achieving balance sheet efficiencies in 2015 will be both critical and challenging for banks. To retain deposits, banks may want to consider:

• Ramping up their customer relationship programs
• Increasing cross-selling efforts
• Investing in product lines that attract stable deposits

Banks may need to assess the portfoilia with a critical eye. 

M&A

Although strategic options will vary considerably by size and balance sheet position of each bank, the M&A market will continue to improve in 2015. Banks should consider:

• Viewing M&A targets with a focus on factors like efficiencies, growth prospects, funding profile, technology, and compliance
• Engaging with regulators
• Ensuring appropriate risk controls, systems, and processes in the $10-$50B range are in place 

Growth

Growth will be a universal priority in 2015, yet strategies will vary by bank size and business line. Banks may want to think about:

• Investing in customer analytics
• Leveraging digital technologies to elevate the customer experience in both business and retail banking
• Determining whether or not prudent underwriting standards are overlooked
• Learning from nonbank technology firms and establish an exclusive partnership to create innovation and a competitive edge

Payments transformation

This year will be an evolutionary year as growth in contactless payments contributes to banks' role in the payments network while cutting further into interchange revenue and brand recognition. Banks may want to:

• Seek innovative ways to leverage customer spending data for specialized promotions and services
• Look for new ways to be top of wallet and differentiate the customer experience

Compliance and risk management

Meeting regulatory expectations will require management to extend its focus from improving specific processes to fully integrating risk management, compliance, and ethics into banks’ culture. To do so banks may want to:

• Reinforce a strong “tone at the top”
• Encourage boards to challenge senior management’s activities
• Empower chief risk officers to pursue collaboration with business lines
  
• Incorporate risk management and compliance responsibilities into performance management programs and employee training

Data management

As the data and analytics function within banks evolves, institutions should be shifting toward a proactive stance to ward off further regulatory pressure. Banks should consider:

• Creating a central regulatory management office to help drive greater efficiencies
• Relying on chief data officers to establish tighter connections with front-office functions and derive greater value from data assets

Cybersecurity

To improve cybersecurity in 2015, banks will be forced to devote greater resources to enhancing the security, vigilance, and resilience of their cybersecurity model and should consider:

• Adopting new methods, such as war gaming, attracting specialized talent, and increasing collaboration with other members of the ecosystem
• Beefing up their intelligence apparatus to detect new threats in a timely manner
• Expanding the role of the CISO to include clear and prompt communications with the board