Banking has become a fundamentally more difficult practice in the wake of the 2008 financial crisis, note Celent analysts in their annual discussion of the trends in global banking.  Banks in North America and Western Europe remain under pressure, while banks in Asia, Australia, and Canada are beginning to do much better.

“China, Canada, and Australia seemed well positioned for 2011,” says Bart Narter, senior vice-president of Celent’s Banking Group. “The United States has benefited from stabilizing of loan losses, but regulatory pressure on retail revenues loom large. Europe is mired in the crisis.”

 

 

The group sees two key business drivers:

1. Many economies are in low-to-no-growth mode: Banks must do more with existing customers in order to grow, and must reduce costs in order to improve profit.

2. Digital channels are taking on new importance in all geographies with smartphone penetration increasing everywhere.

The drive to reduce costs and the reality of the huge growth in mobile and smartphone usage is driving banks to think even more about digital channels. Digital channels can mean internet banking, personal financial management, mobile banking, mobile marketing, and tablets. All have been changing (and will continue to change) the shape of banking. Banks across the globe are building-out mobile capabilities and investing in improving the internet banking experience on both the retail and commercial sides.

 

 

Another consequence of huge cost pressures is the increased appetite for outsourcing, which manifests itself in many ways, including:

1. Replacing internally developed systems for off-the shelf systems.

2. Using SaaS through an external provider, perhaps in an external cloud, perhaps in an internal cloud, or perhaps in a bank-dedicated outsourcing facility.

Outsourcing means more than just business process outsourcing. It can mean shared systems in a service bureau, software as a service, internal clouds, or external clouds. It can also mean new business models in existing spaces, or using off-the-shelf software instead of internally developed systems. Banks are more willing to use other parties to solve their technology and operational challenges.

The continuing focus on risk and compliance is putting more emphasis on analytics. That means understanding the customer better through data the bank already has or can acquire. This insight can be used to better retain customers, better market to them, better understand their risk to the bank, and better predict when they will visit a branch.

In markets where economic growth is low, such as the United States and Western Europe, banks need to gain greater wallet share of existing customers. In both areas, banks are realizing that they have lots of data that can inform risk, pricing, cross-selling, and staffing. That realization has yet to turn into reality in most cases, however, but this is an area that is becoming strategic for banks across the globe.

http://www.celent.com/reports/top-trends-banking-2012