FUTURE OF BANKING
‘Small, innovative
players have begun
to develop and take
ground from traditional
players in a range of
areas including lending
and payments.’
Innovation will be an important driver of change. The socalled financial engineering of complex financial products,
along with challenges of legacy IT systems, have detracted from
the industry’s reputation as an innovator of “socially useful”
services in recent years. Banks are mostly large, complex
organisations, which inherently presents certain barriers to
their ability to innovate. However, innovation is nonetheless
high on the agenda of many, including new ways to streamline
operational processes and improve customer experience. Small,
innovative players have begun to develop and take ground from
traditional players in a range of areas including lending and
payments.
So much is written about the growth in trade between
developed countries and emerging ones, that it is easy to forget
that most trade flows take place within regions rather than
between them. Trade financing services offered by banks are
the lifeblood of international trade, allowing firms to finance
and transact business globally. A 2013 EY report, Successful
corporate banking: Focus on fundamentals, highlights that while
executives are pleased overall with their current core team
of banks, a lack of consistency in the quality and delivery of
services across geographies was seen as a challenge in working
with banks. This challenge of meeting customers’ expectations
across a wide range of markets comes at a time when many
global banks are rationalising their footprint to focus on core
geographies. As trade volumes grow in future decades, this
must be seen as a key challenge to address.
A new investment boom has started in the emerging world.
This trend contrasts with a general decline in investment – as a
Share of Gross Domestic Product (GDP) – in much of the West.
By 2030, many markets that we currently refer to as “emerging”
will have reached maturity. The emergence of Africa as a stronggrowth region is underpinned by a host of factors, including
strong Foreign Direct Investment (FDI) flows, increases in the
quality and quantity of educational provision, the availability
of natural resources and growing domestic demand.
Retail banking is changing, with custo