April 27, 2009 - 8:17am
An IBM survey of over 2750 banking executives worldwide showed that a new order for the financial services industry is characterized by a shift to specialization, higher transparency and lower returns.
The study predicts that banks will be concentrating on the need to specialize around services that clients value rather than continuing to provide a full range of in-house services.
Moreover, IBM's analysis suggest, companies will have to cut their costs by another 20%, mainly by improving concentration on economies of scale, elimination of redundancies and divestitures, integration of IT and business strategies, and disposal of non-core assets.
Furthermore, the study predicted that the following three areas of specialization are likely to emerge due to the new economic conditions: Beta transactors (the majority of financial markets firms will concentrate on utility services), Advisors (as a smaller number of firms will be providing advice), and Alpha seekers (as a large number of small private equity firms, hedge funds and boutique investment houses will focus on high returns from high-risk investments).
Respondents of the survey have also highlighted that improved client service and efficiency will be critical for surviving the competition. The IBM specialists added, that smarter systems will be needed in the future in order to continuously assess companies’ risks and returns across each line of business and adjust their business mix accordingly.
The study predicts that banks will be concentrating on the need to specialize around services that clients value rather than continuing to provide a full range of in-house services.
Moreover, IBM's analysis suggest, companies will have to cut their costs by another 20%, mainly by improving concentration on economies of scale, elimination of redundancies and divestitures, integration of IT and business strategies, and disposal of non-core assets.
Furthermore, the study predicted that the following three areas of specialization are likely to emerge due to the new economic conditions: Beta transactors (the majority of financial markets firms will concentrate on utility services), Advisors (as a smaller number of firms will be providing advice), and Alpha seekers (as a large number of small private equity firms, hedge funds and boutique investment houses will focus on high returns from high-risk investments).
Respondents of the survey have also highlighted that improved client service and efficiency will be critical for surviving the competition. The IBM specialists added, that smarter systems will be needed in the future in order to continuously assess companies’ risks and returns across each line of business and adjust their business mix accordingly.