Global

Details

  • Industry: Financial Services, Banking
  • Type: Business and industry issue, White paper
  • Date: 9/10/2012

The next steps – What banks must do to respond 

New business and operating models will emerge; banking value chains will be disintegrated; new industry structures will arise. In this ‘new normal’, banks should not only optimize Return on Equity and Earnings per Share, they must also focus on regulator driven strategies, such as delivering minimum capital and liquidity ratios and increasing their flexibility to comply with resolvability requirements.

  • Develop an innovative operating model: Existing approaches to the development of operating models are based on traditional, linear problem solving techniques which do not generally address the needs of the current highly fluid, uncertain environment, where banks need to radically change their operating models in order to survive.
  • Think laterally: One way of developing a new approach is to look at the field of design, and borrow proven practices to foster innovation and creativity. This approach should encourage creators of new operating models to think laterally – and to accelerate the process, crucial to the new world in which we find ourselves.
  • Implement long-term sustainable cost reduction measures: We believe banks should find new ways of reducing costs while increasing the quality of their customer service. As our report outlines, we have identified three cost reduction strategies that can also make bank operating models more scalable while dramatically improving customer service.
  • Take an iterative and collaborative approach: The transformation of universal banks into banks fit for this new environment involves new business models, new operating models, new legal structures, regulatory constraints and new financial and non-financial measures. But beware; changing one without considering its impact on others may result in ineffective solutions or unforeseen consequences elsewhere in the business.
  • Develop a new IT architecture: For the banking industry to achieve the necessary degree of separation and componentization, its underlying IT architecture must be capable of operating in a similarly decentralized environment. This will be a significant challenge for banks, but one that must be overcome.

Figure 1
 

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