The financial services industry is facing serious challenges as the economic crisis continues. Continuous imbalances are the root cause of the crisis, which includes long periods with low interest rates, rapidly rising asset prices, massive credit and savings inequalities, as well as low interest rates for large parts of the country. These changes were predicted by the World Economic Forum’s 2007 and 2008 Reports.
The market has had decades of extraordinary growth and capitalism at its finest. However, the market is now adapting to tighter credit, increasing government intervention, a slower pace of globalization, and little economic growth. The industry is at risk of experiencing slowed growth due to increased regulations in the United States. Credit availability has also declined. Max von Bismarck (Director and Head of Investor Industries) stated that the global recession is also impacting the financial sector due to decreased aggregate demand and capital markets.
This article will give leaders, employees, and investors in the financial services industry five timely trends that they can use to stay on top of their growth plans for the next five years. These five trends will be the foundation of the post-financial crisis.
FIVE KEY TENDS
GLOBAL BANKING. The World Bank reports that although banks like American Express, Citibank, and JPMorgan Chase do business in many countries, they tend to be more regionalized in the United States. The financial industry must expand into emerging markets to grow. Companies that pursue a more aggressive growth strategy will reap the benefits of expanding to emerging markets like Africa and Asia. This can provide unparalleled opportunities for profit, as well as increased market share.
IT PLATFORM SHARE. Network World affirms that financial services firms must adapt their business strategies to meet the changing dynamics and complexities of today’s market. Future success will depend on having access to information immediately and integrating across product lines and geographical boundaries. Firms must reduce costs to provide information to global markets. Platform sharing is a cost-effective option. Just as cell phone companies collaborate with local businesses to lower costs and increase accessibility, financial companies can do the same.
E-BANKING. The Economist has released a special report that shows that personal and business banking transactions are increasingly being conducted via cell phones. With 3.5 billion users of cell phones and an anticipated 10-20% annual growth, The Economist reports. E-banking capabilities are rapidly becoming a requirement to be competitive in the market. Through Internet-based services applications, E-banking allows companies to be more flexible and differentiate themselves in the market.
MOBILE MONEY. Mobile money is a low-cost and safe option for the financial sector due to rising mobile phone usage. Mobile money makes it easier to transfer money to friends and family. Money can also be sent and paid without having to visit a bank or other payment center. M-Pesa was an early developer of mobile currency. He concluded that mobile money has “immeasurable social and economic benefits.”
SELF-SERVICE. IBM believes that self-service and customer service should be the primary focus of financial services firms in this new world. applies, a self-service portal that firms can buy, allows customers to check their account status and get instant access to all available services. An IBM representative states that customers get faster answers to their questions and concerns. This technology automates many processes, which results in a reduction of staff workload and faster and more efficient service.
To grow in the future, financial service companies must be able to sustain steady growth in emerging markets. Deloitte and Touche Research report that financial services firms are not well-positioned to take advantage of geographically dispersed opportunities. This report was endorsed by more than 93% of executives who were interviewed.
According to the same report, financial companies need to move away from mature or veteran markets and invest in emerging markets. “By 2025, the veteran market will be outsold by markets with faster-growing economies and more sophisticated financial product needs.” For expansion opportunities, USA-based companies can look to African and Japanese markets. Kennedy Consulting analysts believe the market will recover from the global financial crisis in 2011. However, there won’t be a return to the robust levels of 2007 until late in the decade. The five key trends highlighted in this report will hopefully help leaders, employees, and investors in financial services to see a solid future.
Henson and Wilson also discuss growth strategies in the 2002 Journal of Business and Industrial Marketing. They discuss how extreme changes have taken place in the financial services industry and how many firms are trying innovative technology and customers to create and execute successful strategies. Technology and innovation will be the winners for the financial services industry, despite the ups and downs in the financial sector. Technology will play a major role in these firms’ strategies, as online banking is now the norm for most customers.
The customer is at the heart of all trends in financial services firms. This means that creating new value for clients and potential clients will be a priority. Mobile money is a great idea in both emerging and developed markets. It combines convenience with technology. As part of their credit card services, many companies offer speed to pay. This allows you to pay quickly and without having to swipe your card. The embedded chip allows payments to be made by placing the credit card near the payment processor. Mobile money is a way to expand payment and money transfer without the use of a credit card. You can use your cell phone to make payments, withdraws, deposit, and transfer money.
According to the World Bank, innovative technology and a rise in e-business strategies will result in lower costs and increased competition in financial services. The World Bank says that the Internet and its related technologies are more than new delivery channels. They are also an affordable, unique, and highly effective way to deliver the same services. Partnerships with technology companies will help financial service businesses grow organically, increase customer loyalty, and meet customers’ growing needs for convenience and services.
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