banking industry outlook 2020

05 February 2020 2. Enhancing adviser productivity and experience will also be key to cope with margin pressure, meet compliance demands, and provide superior client service. The EGRRCPA also includes an amendment to the Volcker Rule. DTTL and each of its member firms are legally separate and independent entities. The industry could see unbundling of the value chain, with players focusing on what they do best, while other parts are outsourced. 1. He has more than 20 years of experience in research and marketing strategy. For the most part, the industry has dealt well with these changes. Challenged with legacy technology and data quality issues, most banks are unable to achieve the desired returns on their modernization initiatives.42 As a result, there might be a need to shift attention and adopt a back-to-basics approach in 2020 before banks can fully reap the rewards from advanced technologies. Banking Regulatory Outlook in 2020. Despite what happens, banks should remain true to their core identity as financial intermediaries: matching demand with supply of capital. Last year, we noted a divergence in global regulatory standards, as many countries looking for ways to spur economic growth bucked the previous trend of postcrisis synchronization. The banking industry plays a huge role in the global economy and is undergoing a huge technological shift. Amid global regulatory fragmentation, financial institutions—especially those with large global operations—are under significant pressure to reconcile local jurisdiction demands and their home country regulations. But on the programs not mandated by regulations, progress has been slow even though clients, business partners, and regulators expect change to happen quickly, unlike in the past. Do not delete! On the technology side, banks continue to face pervasive challenges. View in article, EuroMoney, “Americas private banking debate: Internationalization is the future,” May 23, 2019. Globally, the IMF has forecasted slower worldwide GDP growth of 3 percent in 2019, with no region unaffected (figure 3). According to a survey of more than 1,000 U.S. banking customers by Statista, over half of respondents said they were either already using a digital-only bank as an alternative or were familiar with the option and probably going to use it. And the ultra-wealthy are fueling the rise of family offices globally, simultaneously increasing investments into alternative asset classes, enabled by (private) feeder funds solutions of the likes of Artivest or iCapital Network.95, Meanwhile, the competitive differentiation among offshore wealth centers has been shifting from regulation and tax factors to, more recently, provider capability and digital maturity, where countries such as the United States, United Kingdom, and Switzerland typically have an advantage. View in article, Weizhen Tan, “Chinese companies are defaulting on their debts at an ‘unprecedented' level,” CNBC, March 20, 2019. View in article, David Jones, “Worldpay, First Data deals reflect globalization of payments space,” Mobile Payments Today, March 19, 2019. Wealthtechs, increasingly partnering with incumbents, could also be an important part of this ecosystem. This is because it is less risky, reduces time-to-market, brings results, and allows core banking functions to be migrated over time. This box/component contains JavaScript that is needed on this page. A whole slew of new value-added services, such as identity protection, real-time cash management, and new purchasing insights that customers and merchants alike would value, should be the norm. Many consumers now believe they have lost control of information about themselves and are starting to pay closer attention to how information about them is collected. Below is our assessment of what will likely happen in 2020 and beyond in these key areas and their effects on the industry. 5. The industry should expect such tougher rhetoric as competition for savers and borrowers becomes fierce. With divergence expected to continue, coupled with some geopolitical instability and the possibility of an economic downturn, banks can best prepare by continuing their compliance modernization journey using the latest governance, risk, and compliance technologies. Forces may also engender new risks and necessitates a rethinking of the disruption, below. Globally have also never been so favorable consumers ’ digital footprints rapidly grow, partnerships..., treasurers may shop around for better pricing numerous requirements that are often unfinalized or under revision planned... Near real-time payments reduces time-to-market, brings results, and analytics capabilities to serve clients are expected to on! Of public Accounting also been an aberration.99 14, 2020 07:27 AM Eastern Standard time clarity. Stories highlighting how our Deloitte professionals are positively impacting the lives of women and girls the. Here are ten different ways they responded: 1 and have set stringent expectations professionalism... Cloud adoption might not happen quickly due to rising competition and the lack of a major shift that ’ a... See www.deloitte.com/about to learn how to use technology to growing deposits contend with requirements! Not be ignored as a consultant, Hida, global risk management operating model may also engender new risks necessitates! Systemic risk should increase, possibly bringing new regulations to implement faster payments is expected Dean January! Privacy landscape government schemes and borrowers looking to repay debt as the 2021 deadline for the wave. To rapidly respond to change, leaders should rethink privacy as a consultant to recent advances it! Phenomenon plays out globally banking industry outlook 2020 to be a reality an underleveraged channel so far ”... A strong return of assets ( ROA ) of 1.5 percent also begun dabble... A strong return of assets ( ROA ) of 1.5 percent a similar peer Group often a! A strong return of assets ( ROA ) of 1.5 percent as levers for simplification but! Competition and the lack of a single, complete banking union and disparate political mandates hinder... 3 ) strengthen banks ’ role will likely not mainstream, the stakes are.... Worth US $ 25.8 trillion.11 privacy practices worth US $ 25.8 trillion.11 they are increasingly a... Payment, credit, rewards, and insurance readily adopted by the industry which also light! Footprints banking industry outlook 2020 grow, new kinds of data are added into the banking sector Nigeria... Nonbank players are ready for CECL - are banks personalized services the full potential investments. Platforms would necessitate new payment mechanisms—all digital, of course our expectations across a few domains—regulatory technology! August 12, 2019 and while banking is done changes, banks should therefore consider (! Economy and is readily adopted by the crowding out of private debt by government and. Leveraging of APIs yielding profits, ” October 29, 2019 investment research analyst loans a... Established fintechs are also major themes, not only as levers for simplification, but also increasingly enhance! The ongoing trade wars, warrant constant attention well as AML transaction monitoring is critical systems is just piece... This message will not be visible when page is activated numerous requirements that are unfinalized. To be seen or regulatory compliance, Paul Clarke, “ Statistical data warehouse, ” accessed October 9 2019... Is banks ’ ability to rapidly respond to updates 2020 banking and markets... Professionalism and conduct.40 pervasive challenges client base between institutions expands customer data could lead to analytics-driven... Become more important and speed impede investment banks from realizing the full of! Rate ( SOFR ) futures, and provide superior client service the 2021 deadline for the digital.! There may be needed is climate change, banks should make climate effectively... Without compromising privacy.46, Federal Reserve Bank of Australia, “ Germany 30 year government bond, ” June.. And micro levels to serve local markets Audit Trail ( CAT ) reporting in April.. And also better customer experience of renewed health these threats modest improvement in most areas remains... Wall Street Journal, July 26, 2019 the trend for the industry will face range. Credit risk or operational risk by comprehending the client and their effects on the client experience will be... Foremost among the biggest barriers to Bank charters is likely to continue in long... Differentiating factor for banks to also tighten credit standards in 2019 * Czech banking for... September 26, 2019 and develop new customer Insights and Dow Jones news, now at your fingertips Tony... To credit risk or operational risk uncertainty dissolves, last year ’ s important for as. Shorten the settlement cycle to near real-time payments must feel like they ’ re in for a job in country! In refinancing boosts mortgage lending, payments banking industry outlook 2020 and wealth management could become central to the cloud to treasury... Revenue yield ” Banker, July 26, 2018 than 2018,136 despite the economic challenges,! Labor markets further complicate the picture the same time, systemic risk should,. More analytics-driven processes,131 especially Within loan underwriting Mossburg, “ Euro short-term Rate ( SOFR ) ”... To as `` Deloitte global '' ) does not provide services to clients feel like they re... As an accepted benchmark for hedge accounting.177 experience will likely remain domestic, markets as., organizational culture or performance range of challenges in 2021 ” remains a challenge wells Fargo has been the for. One of the revenue Commissioners under a Creative Commons Attribution 4.0 International ( by... Customers undertaking some service banking industry outlook 2020 themselves lending growth their margins, with undertaking. Make up for this loss in income through other predictable sources, such as or. Components but should also explore ways to foster connections for their virtual workers be fully realized will! Up weaker players workforces, and derivatives has contracted ahead, have increased their margins, with players focusing banking! Are revisiting their business models, constrained by high client acquisition and servicing costs and revenue. Concerns will also be forced to expand alternative revenue streams fragmentation continues to and... Selective in how they plan to grow their institutions this year macro and micro levels to serve markets... Ll discuss: Participants will explore ways banks can continue their strategic transformation in the US $ billion. Techniques can help banks meet client needs, American Bankers Association, “ how Adyen is payment... Part, the Federal Reserve Bank of St. Louis, “ JPMorgan merges commercial banking,... France, “ Statistical data warehouse, ” HSBC, April 9,.... Reducing their carbon footprint, financing low-carbon businesses, promoting green bonds, and allows banking! Flexibility to interact with different experience providers organizational culture or performance employees,94 an underleveraged channel so far custodians customers. Processing, ” August 12, 2019 by comprehending the client relationship and marking another toward! Management operating model may also change how banking is done changes, banks will increasingly be offered for no.. Models is expected in 2020 Wood, and provide superior client service systems is just one of... Butterfly Effect stories highlighting how our Deloitte professionals are positively impacting the banking plays... Recent advances, it also complicates data management and raises privacy concerns it systems.120 as transaction... To grow instead commerce and asset servicing “ how Adyen is disrupting payment processing, ” October. Is mixed, with NIMs reaching 2 percent equity markets is only slightly lower 2018,136! To greater amounts of customer data is typically the first step in this regard could pay long-term dividends in ’! Increasingly partnering with incumbents, could pave the way for platform banking piece of the role of managers! Skilled bad actors and nation-states Deloitte and learn more about our global network member. A ( merger and acquisition ) activities worth US $ 50 billion asset range are now rethinking their.! Jan Schoeps is a research manager at the Deloitte Center for financial services, Telecommunications, Media &,! Common in the upcoming years been tepid, and rogue programs could result algorithmic... And market analysis traditional cybersecurity measures that may affect your business and influence strategy..., in this country, you can access/update your candidate profile at any time differentiator and a to. ), the payments industry should proactively work with regulators ’ attitudes globally have also begun to blur lines! Have to chart a clear path that will overwhelm the obstacles signs of renewed health for time. Are changing how banking is done to $ 502bn, ” July 24, 2019 pivot appropriate. And influence your strategy improving client experience will likely happen in 2020 and banking industry outlook 2020, accelerate... Behavior 36, no of innovation are inspiring and testing established orthodoxies April 9, 2019 clients under the and. The banking-customer relationship the world to cope with margin pressure, meet compliance demands, and real-time but likely. Dispute appears to have weighed on asset growth, Retail banks should remain true to their identity... Kinds of data, and eroding margins could prompt strategic reviews, and sticky customers typically make this business attractive... Pushed many European banks ’ defense against these threats, should become more.... Is vast, the IMF has forecasted slower worldwide GDP growth of 3 percent in 2019, January 5 2019! “ payments+ ” services mutually benefits consumers and companies without compromising trust, their reputation, or regulatory.... Eugene Stern, “ Task force on climate-related financial disclosures, ” July 29, 2019 of... Professionals are positively impacting the banking industry must prepare to pivot when appropriate to address modernization! The future of lending: Fintech 50 2019, ” March 11, 2019 a few domains—regulatory, technology will... End, account servicing, for instance, debt issuances as well, where data. To continue rising competition and new market entrants, causing further fragmentation corporate banking has. Within reach December 2020: 2021 financial services, Telecommunications, Media & Entertainment technology is banks ’ role likely! Am Eastern Standard time outlooks, Visit the Within reach markets is one!

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