BANKING NEWS INTERNATIONAL
Scenarios for
the next decade
of banking
Rebuilding a system that will
be beneficial in a complex and
changing world.
I
n the banking industry’s first-ever interactive eBook, published
by Ernst & Young and Knowledge@Wharton, Global Banking
2020: Foresight & Insights, banking leaders explore potential
scenarios – including some extreme possibilities – that could
develop in the coming decade, along with strategies to help
global banks thrive.
Banking practitioners, Wharton professors and members of
Ernst & Young’s Global Banking and Capital Markets practice,
recently completed a year-long scenario planning exercise aimed
at envisioning what the banking industry might look like eight to
ten years from now. The result is a video-enhanced eBook, which
blends a text report with graphic information and video clips from
an extensive series of interviews. It outlines the key strategies
distilled from the scenario planning process — strategies for banks
to consider now in order to be successful over the next decade.
The four scenarios that emerged from the discussions are: “business
as usual,” “financial issues,” “new markets” and “change, change,
change”. If a bank prepares for all four scenarios, according to Ernst
& Young, it will be equipped to deal not only with these possible
futures but also with those that fall in between.
‘The purpose of scenario planning is not to identify one certain
outcome to plan for, but to model for how your business would
perform under a variety of conceivable scenarios,’ said Ian Baggs,
Ernst & Young Global Banking and Capital Markets deputy leader.
‘Institutions that organise cross-functional leadership teams to
prepare long-term business strategies and contingencies will
undoubtedly rise above their competitors.’
Mauro Guillén, director of the Lauder Institute and a management
professor at Wharton, added: ‘Trigger events, especially in the
banking sector, cannot be expected to unfold in a linear way. It is
vital for an organisation to be proactive in developing solutions for
potential challenges. A reactive approach will leave you fighting to
keep pace and potentially without a place in the game.’
The series highlights three key strategies: move into emerging
markets, develop a nimble culture and invest heavily in technology.
In the video series Roch Parayre, partner at Decision Strategies
International, discusses how banks should use scenario planning
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Mauro Guillén: ‘A reactive approach will leave you fighting to
keep pace.’
to assess their business plans and evaluate customer drivers. ‘Many
organisations plan for one view of the future. In a world that’s very
uncertain, that’s a very risky posture to have,’ says Parayre. ‘To
prepare for the future amidst today’s uncertainty, there are three
things banks need to do. Firstly, they need to do a pressure test to
assess how well prepared they are to succeed under different possible
scenarios. Secondly, they need to identify which aspects of their
organisations work under the different scenarios. Thirdly, they need
to realise that it’s futile to try to predict the future. Consequently,
they should look to add some flexibility to their organisations so
that they are able to adjust and succeed in a very complex and
changing world.’
The Global Banking 2020: Foresight & Insights enhanced eBook can
be purchased in the Apple iBookstore and on Amazon. It can be
viewed on an iPad, iPhone or iTouch using the Apple iBookstore app
or the Kindle app. For more information or to view the video go to
kw.wharton.upenn.edu/ey-global-banking/.