Dynamics of The Banking Industry

Banks today are faced with unprecedented challenges created by the three forces of De-regulation, Globalisation and Technology. 

 

1. De-regulation

Deregulation has created a climate of increased competition and changing business structures. New competitors have emerged from both different geographies and other industry sectors -- such as insurance -- challenging the value delivered to customers and the costs. There are more opportunities for mergers, and they must offer a return on investment through greater reach and economies of scale.

2. Globalisation

Customers have better access to information and new expectations. The Internet, cable news, mailing lists and newsgroups are just a few examples of how regular investors are provided with information that was previously unavailable to them. As service industries have moved to availability through a variety of communications and support 24x7, customer expectations have hit new highs.

3. Technology

The innovations in computing and telecommunications have improved all the functions in retail banking. Computers have empowered the production and telecommunications have created new distribution channels that have instantaneous and global reach. The advances in communication and information technology have accelerated and broadened the dissemination of financial information while lowering the costs of many financial activities.

 

Changing Face of Banking & Finance

In recent years, the banking & financial services industry has been undergoing rapid changes, reflecting a number of underlying developments.  Internet, wireless technology, and global straight-through processing have created a paradigm shift - from brick-and-mortar banks to banking virtually across time zones, geographical locations, access points and delivery channels.

  • Customers are increasingly fickle and demanding.
  • Unprecedented advances in technology are changing the rules of the game.
  • New entrants to the industry are picking off profitable niche businesses.
  • A rash of mergers & acquisitions will most probably evolve into massive global consolidation across the industry as a whole.
  • And last not the least diminishing lines between banking and other financial services.