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The banking industry currently faces powerful forces which are reshaping it fundamentally. The economic and financial crisis has triggered far-reaching new regulation which forces banks to select and price their business more rigorously. Low interest rates put revenues under pressure and may also change saving and borrowing behaviour. Higher banking fees as an alternative to shrinking interest margins may in some cases be hard to implement in the face of competitive pressure. A number of banks were resolved, nationalised, taken over or merged as a result of the crisis. Cost pressures and a strategic rethinking of bank business models trigger further mergers and takeovers. Electronic and mobile banking are progressively being used and are fundamentally changing customer behaviour and banks’ relations with customers. Demographic change alters the relative weight and the profile of banks’ various target groups. A rising number of wealthy individuals with considerable financial sophistication open up new avenues for custom-tailored wealth management. At the same time, cost-effective customer services need to be shaped for all customer segments. Against this environment, banks will have to rethink their channels of distribution, business and operating models, generate radical and continuous innovation to bridge cost pressures with changing customer needs and the need not to lose touch with their customer base, while at the same time observing regulatory rules and managing risk wisely.
