2019 Banking & Capital Markets Outlook

The global banking system is not only bigger and more profitable but also more resilient than at any time in the last 10 years. The world is becoming too volatile, and external change is happening more rapidly than before. Taking a traditional approach in confronting these challenges may not work. No doubt many banks have embraced digital transformation across the banking and capital markets value chain. “Change the bank” initiatives should move to the fore and could essentially become the new operating model for “running the bank.”

Topic one: Regulation- A new era of global regulatory divergence

• 2019 presents an opportunity for banks to align regulatory requirements with their business strategies as regulations around the world undergo major shifts.

Topic two: Technology- Creating a symphonic enterprise

• As banks accelerate digital transformation efforts, coordination between the strategy, technology, and operations teams will help banks overcome the risk from reliance on patchwork archaic systems.

Topic three: Risk- Strengthening the core with new-age defenses

• Consider a threefold approach for efficient cyber risk management- go back to the basics of risk vulnerability management and strengthen controls, applying analytics/AI at scale, and lastly, building a resilient infrastructure to withstand disruption and long periods of stress.

Topic four: Retail banking- The digital leadership race

• Retail banks are expected to continue the growth momentum, as a positive economic outlook and future interest rate hikes lift banks’ margins in the United States.
• However, rising competitive pressures will potentially make it pivotal for banks to maintain a sustained focus on enhancing customer experience (CX) and digital transformation.

Topic five: Corporate banking- Digitization and a new credit discipline

• Given the likelihood of a downturn in the next five years, corporate banks should adjust their risk appetite in 2019 and strengthen their specialized lending expertise.

Topic six: Transaction banking- Modernizing operations with a focus on improving the client experience

• Current protectionist policies and geopolitical frictions could open new trade corridors within the Asia Pacific region in 2019, benefiting Asian banks.
• Beyond automation, focus on empowering clients to serve themselves when and how they desire.

Topic seven: Investment banking- New client engagement models and ecosystem orchestration

• A fundamental rethinking of the client engagement model should be considered: a pivot from product orientation to a client-centric and bespoke delivery of services and orchestrating solutions from others in the ecosystem.

Topic eight: Payments- The imperative to diversify growth, bolster security, and restructure the organization

• As institutions harness the power of data, bolstering security and enhancing CX will potentially remain the cornerstones of growth. However, reimaging CX will require institutions to integrate the payments function more deeply in their organization structure.

Topic nine: Wealth management- Balancing business growth with product rationalization and transparency.

• The prospect of a market slowdown, growth of digital advice platforms, regulatory uncertainly, the drive toward low-cost options, and the push for greater price transparency would create a challenging environment for the wealth management units of banks.

Topic ten: Market infrastructure- Harnessing the power of data and technologies to drive a competitive growth agenda

• In 2019, exchanges should strive to integrate their disparate systems. AI can help incumbents in multiple ways to improve operational efficiencies.
• Upskilling talent to work with advanced technology platforms should be one of the focus areas.