Banking Outlook 2017
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The 2017 Banking trend report contains a collection of quantitative analyses and current trends impacting the industry. The report addresses 5 distinct topics: Consumer Banking, Trading and M&A, Commercial and Transaction Services, Payments and Market Infrastructure.
Over the past months, political changes on international level - such as the US elections and UK’s Brexit - have shown to be of benefit to several financial markets. However, structural changes in technology and regulations complemented by increasing customer demands, are likely to have a lasting impact on the operating models of banks. New parties seek a position in the value chain; not only in distribution but also in terms of product domains and on operational level. At the same time, demand for quality, efficiency and scale increases. This requires banks to clarify their position in the market and collaborate with technology savvy parties, in order to offer customers even more relevance, convenience, safety and availability. And all of this against a lower price. How do banks cope with this, and how will they stay profitable on the long haul?
Industry performance in the past several years reflects stability and resilience. However, performance does need a boost: banks will need to exhibit prudence in lending, cost management and investments for future competitiveness presents a difficult trade-off, a complex execution list will likely be clouded by uncertainty about the coming regulatory regime. In addition, core transformation, ongoing digitization, and automation will be the key drivers and there will be sought for optimal business and operating models in a fluid environment.
Trading and M&A
Trading and M&A is still grappling with long-term sustainability. Mixed outlook for market activity tempers hopes of solid revenue growth, there will be a search for new economic architecture and fundamentally different operating models, regulatory respite will remain elusive and keeps shaping executive action, and automation unleashes a new wave of efficiency in capital markets.
Commercial and Transaction Banking
The transaction-based businesses will likelybecome more critical. Balancing investment in product innovation with cost savings may not be easy, efficiency requirements will give a boost to third-party service models, regulatory restrictions will drive banks away from risky/capital intensive businesses, amd end-to-end digitization goals will dominate technology budgets.
We will head towards a faster and more customer-friendly payment system. Tranformational drivers of payments will be digital and speed, there will be a fundamental change inside out in terms of operational transformation. Furthermore, faster payments, cyber risk, and intellectual property will take center stage and IoT-enabled payments, bots, and encryption solutions are here to stay.
In terms of market infrastructure there will be consolidation in pursuit of new revenue streams and efficiencies. There will be a broad shift towards non-transactional revenue in order to accelerate, there is a myriad of operating challenges that require agility both internally and externally, modernization will likely be inseparable from heightened security and reporting, and there will be new avenues of value creation.