2018 Banking Outlook

Can banks transform quickly enough to retain their dominance in a rapidly evolving industry? Balancing the need to restructure for the long-term while finding near-term growth in next 12 to 18 months is the challenge confronting the industry. Some conditions may be shifting in the industry’s favor, including regulatory stabilization in some areas, coordinated global growth, and stronger balance sheets.

Our 2018 Banking Outlook examines the six key themes that banks should address in order to overcome potential near-term challenges and capitalize on sustainable growth opportunities.

Six macro themes that should be critical for long-term growth:

• Customer centricity. Long-term sustainable growth in the banking industry seems only possible with a radical departure from a sales (and product) obsessed mindset to one of genuine customer centricity, and further rationalization of strategies to target the right markets, customer segments, and solutions.
• Regulatory recalibration. 2018 presents an opportunity to modernize regulatory compliance and bring together disparate silos created for individual compliance goals.
• Technology management. To help banks become more agile, bank chief intelligence officers (CIOs) should manage their portfolio of technology assets to emphasize activities that truly differentiate the bank. Externalization efforts should be focused on generic functions with an emphasis on cost efficiencies.
• Mitigating cyber risk. The potential for cyber risk has been increasing with greater interconnectedness in the banking ecosystem, rapid adoption of new technologies, and continued reliance on legacy infrastructure designed for a different age.
• Fintechs and big techs. Fintechs continue to lead innovation in the banking industry by sharpening their focus on customer experience. Banks face a number of choices: replicate what fintechs are doing, respond with equally innovative solutions, become more symbiotic and less competitive, or pursue a mix of these strategies that fit their unique capabilities and market positions.

Reimagining the workforce. Banks should consider rethinking their workforce strategy given how work is evolving—with increasing automation and greater diversity in the labor pool.