Trends Reshaping Banking in 2017
From a bank's perspective, the glass is both half empty and half full as we head into a new year. The financial services industry continues to experience unprecedented change. One set of factors is purely environmental - sluggish global macroeconomic growth that shows no signs of picking up, rising regulatory capital and operating costs, depressed interest rate environments in developed markets, large non-performing assets in developing economies, and devalued currencies in several pockets, to name a few. This is putting further strain on the banking business, which is already bogged down by a marked slowdown in growth and profitability.
The second set of change drivers can be summarized in one word, namely, digitization. The rapid evolution and adoption of digital technology is posing a very real threat of disruption to the established banking business as customers continuously reset their expectations based on their experience in other businesses, and new competitors prove more agile than incumbents in fulfilling those demands. Regulators, once sworn to protect banks, are now gradually lowering the barriers by encouraging innovative and disruptive digital business models through open banking initiatives. But at the same time, digitization has also thrown open undreamt of opportunity. It has smashed the cost and efficiency benchmarks in banking operations. It has enabled unprecedented service and experience delivery. And it has enriched decision making with real-time, actionable intelligence.