Key business and technology trends in the banking sector and their implications

The banking industry has experienced mixed results in the post-crisis period from 2008 to 2010. Industry growth has slowed considerably but risk management and profitability has shown a significant recovery. Profits have returned to pre-crisis levels and the solvency of the industry has witnessed significant improvement. The dichotomy in the growth prospects of banks from developed markets versus those from the emerging markets has also been highlighted by the crisis. Driven by buoyant economic prospects, the banking industry in the emerging markets remained profitable even during the worst phase of the crisis. This contrasts with the performance of banks from developed markets which registered huge losses during the same period. Even in coming years, banks from the emerging markets are expected to drive the growth of the global banking industry.

The industry has also entered a period of enhanced regulation. More stringent capital adequacy and risk management standards are now being imposed upon banks, along with a corresponding increased strain on their traditional business models and operating margins. Looking forward, certain key priorities have emerged for the banking industry, prominent among them are: restoration of customer confidence; addressing issues such as low efficiency of existing channels; ageing technology; high operating costs and the existence of complex processes. Technology, including the development of consumer-centric solutions, is increasingly being seen as a key to meeting these priorities. This paper explores major global and regional trends including the replacement and upgrades of legacy core banking systems, evolution of payment processing hubs , and the emergence of business intelligence and customer relationship management as tools to deliver customized offerings and drive greater consumer-centricity.