Banking Outlook 2017 - Consumer Banking

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Banking Outlook 2017 - Consumer Banking

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Industry performance in the past several years reflects stability and resilience. However, performance does need a boost. How will major developments shape the Consumer Banking industry next year, and how can firms respond to these trends? Download the Banking Outlook 2017.

Stability and resilience
Industry performance in the past several years reflects stability and resilience. The banking system’s return on assets remains in a narrow band, as banks offset weaker NIM with excellent asset quality and some efficiency gains.

 

Customer and business growth
Higher interest rates will mean customer and business growth that includes prudently managing increased lending. Higher wage growth, rising household incomes, and consumer confidence should bring new retail and small business lending opportunities, especially as NIMs rise due to rate hikes. However, retail deposit costs may rise faster than expected, as liquidity coverage ratio requirements place a premium on high-quality stable funding.

 

Operational Transformation
Transforming operations will entail carefully managing tradeoffs between remaining competitive and streamlining costs. While a new political regime puts policy uncertainty top of mind, banks are expected to continue moving from traditional levers of cost management and to shift operating models, such as the use of central servicing organizations to drive simplification and automation.

 

Risk and Regulatory Agenda
A complex execution list of regulations and risk is now clouded by uncertainty about the coming regulatory regime. With emerging clarity on the new administration’s regulatory posture, banks may reexamine strategies. Nevertheless, culture and conduct risk will continue to be major agenda items for boards and executive management. Regulatory backlash could force reviews of front-line staff goals and incentives, particularly those related to sales practices and cross-selling, as well as executive accountability.

 

Technology Priorities
Refining the customer experience will be the main driver for technology that drives core transformation, digitization, and automation. As technology upgrade cycles continue to shorten, banks may finally demonstrate a willingness to retire legacy systems for cloud-based platforms, many of which operate on subscription models.

 

Wealth Management
Despite expected new developments regarding the DOL rule, banks will likely continue to optimize their wealth management business and operating models. Assets managed by robo advisors are likely to continue increasing at a fast clip, as banks, insurance companies, and traditional wealth managers embrace the technology.

 

Banking Outlook 2017

More information?

Do you wish to have more information about the Banking Outlook 2017? Please contact Emeric van Waes via +31882884619 / evanwaes@deloitte.nl

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