Blade Watch

Finextra

An IBM survey of over 2750 banking executives worldwide forecasts a new world order for the financial services industry, characterised by a shift to specialisation, more transparency and lower overall returns.

The study predicts significant consolidation in segments wrought with over-capacity – such as investment banking, asset management, and wealth management – as firms adapt to a new lower-margin landscape where they will need to specialise around services that clients value rather than continuing to provide a full range of in-house services. Enhanced regulation and transparency will also eliminate opacity, with previously high-margin activities becoming commoditised.

To compete effectively, IBM’s analysis suggests that most firms will have to cut their costs by another 20%, over and above the economies they realise from redundancies and divestitures. This could prove difficult, as many of the financial institutions that went through the recession at the start of the decade have already implemented the most obvious cost-cutting measures. Moreover, Only 12% think that their firms are effective at capitalising on new technologies, even though 39% believe that this is a key attribute.

An interesting article, the financial sector is going through challenging times, there have been many redundancies and re-structuring as banks seek to reduce costs and exposure to more risky markets or areas which add less value.

The interesting thing in the IT world is that there are three component failures which have not helped:

1. Lack of investment in the right way
2. Ruled by the business without retrospective fix
3. Reactive consumption, a business strategy but where’s IT?

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