Five_Forces_Shaping_Banking

Five_Forces_Shaping_Banking - Five Forces Shaping the...

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Five Forces Shaping the Banking Industry Preparing for the economic recovery
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A.T. Kearney | FIVE FORCES SHAPING THE BANKING INDUSTRY 1 A fter months of turmoil, the banking industry is starting to show signs of stability. In their struggle to survive, however, many insti- tutions turned their attention away from certain forces that are shaping the economic landscape—and to which banking institutions must respond. A.T. Kearney believes that addressing these forces will be critical as the economy stabilizes and begins its upturn. As banks prepare their strategic agendas, the focus should be on five major forces. As all signs point to an economic recovery, the banking industry is working diligently to restore capital and profitability. The best banks are becoming future focused—striving to meet the unique needs of a new breed of customers while also dealing with the inevitable new regula- tions. True success in next-generation banking will go to those prepared for five forces that are shaping, or reshaping, the industry. This paper highlights all five forces and outlines the key ingredients for success. 1. The New Bank Customer There will be profound changes in consumer and business profiles over the next decade. Demographic, social and technological factors will fragment customer needs, tastes and prefer- ences. As people live longer, travel more and work and play “virtually,” banks will not only have to manage their costs, but also refine their value propositions and service concepts if they are to compete effectively (see sidebar: Thinking in Customer Segments on page 3). As banks look for ways to design specific products and services to address these changes, packaging, labeling and category management will become crucial. Diminished public confi- dence in the banking system will force banks to re-learn how to communicate their service offer- ings and restore consumer confidence. How can banks serve these various seg- ments profitably? Tailoring products and distri- bution to each segment will be difficult and expensive, as geographic boundaries will fade. Even with the Internet, it is difficult for banks to operate outside their home countries. What choices must be made? Consistency. A consistent approach to defining product offerings, channels, brands and cost-efficient delivery will be essential. Banks will
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FIVE FORCES SHAPING THE BANKING INDUSTRY | A.T. Kearney 2 have to satisfy dozens of customer segments from a single product “factory,” much like the automo- tive industry does as it serves multiple customers with different vehicles built on the same platform. Flexibility. Flexible delivery will be essential. For example: Can a retired British civil servant living in Spain pay his bills from his British account? Can a college savings account be fed by monthly allowances from two accounts in differ- ent countries? We believe banks will have to bundle existing accounts into packages tailored to meet such specific needs.
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  • Summer '12
  • A.T. Kearney, Banking Industry

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