A Brief Review Of The 2016 Banking Sector

A brief review of the 2016 banking sector

The present scenario with the banking sector is experiencing many serious threats owing to the transformation of the industry. Here is a brief reviewing of what the banking industry and the capital markets are facing today and what we can expect in the next decade.

The next decade has a lot of changes in the banking industry which will force traditional players to either disrupt their businesses or get dis-intermediated in order to thrive in their future plans.

How to thrive in this disrupted world

Whether this viewpoint has been taken seriously or not, the fact that the various aspects related to the capital markets and the banking industry faces a huge number of competitors cannot be denied. These competitors’ main aim is to use strong technologies that can transform banking and overturn conventional wisdom.

Finance planners predict that banks will get connected increasingly to third parties or a web of vendors to create a simplified and organizational paradigm. Though this may offer many benefits it can also pose renewed operational risks as well.

For the future of the banking industry there is a need for a strident focus on the customer experience and a more digital savvy environment. Over the last 10 years the reputation of this industry has not been very good with regard to brand value and consumer trust. Banks, when compared with other industries, have been ranked as having the least growth in the last decade.

In order to catch up with high technology brands like Google and Apple, the banking industry has to provide good customer experience and service differentiation in the future.

Survival of the fittest

It is a rat race between the banking industry and other industries who is the fittest. Over the last decade various factors have come together in dampening the bank’s competitiveness with non-banks. The recorded low interest rates have negated the advantage of the traditional bank funding options. Fresh financial players enter the industry without much upfront investments and they are more tech savvy thus attracting and drawing customers to their side.

The prediction of the future has three variations:

1. A small number of marketplace lenders will acquire smaller rivals and secure joint ventures with bigger banks and they will also sign partnerships with smaller banks.

2. Secondly, the big banks will purchase data ecosystem players/technology and marketplace lenders to strengthen or replace many aspects in the banking operations.

3. MPLs (market place lending) will opt to provide clearer services to the banks.

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