| “It probably does not come as a surprise to anybody that the concept of the traditional bank is gone. The banking industry is being transformed as it struggles to find avenues for growth, regain trust and rise to the challenge of non-traditional players. Fiscal pressures and rising customer expectations are forcing the banks to make tough choices about which customers and markets to serve. As banks cut costs and adjust to an era of capital constraint, it is very possible that you are no longer a part of their plans. Not that I am suggesting that banks are neglecting their customers; but rather that you may be just one of their competing priorities!
Geographically, we are seeing shifts from global to local banking. National and regional institutions are now more visible where we might not have noticed them before. Banks in the EU have been retreating to their home markets since the crisis and we believe this trend will continue. The once perceived advantages of global banks, such as pricing and coverage, are now less important as regulatory constraints, matching lending with deposits, force the banks to compete on a local basis.
In product terms, where we once tended to give our ancillary business to those banks that extended their balance sheet, the divorce between relationship and credit will mean that selecting banking partners will be driven increasingly by product need and jurisdiction. Similarly, new industry players are emerging, an example being how insurance companies offer products to replicate bid and performance guarantees at a competitive price.
Competitive advantage is now influenced more by technology than a physical network, and customers are being forced to adapt. This also presents an opportunity if we accept that the new world reality features low cost banking providers, with every product having to be profitable on a stand-alone basis. Credit, best practice, innovation, service and product offering might all be found at different institutions. We need to be both more creative and more focused in our choice of partners within our bank group.
In summary, an increasingly constrained banking environment is forcing existing players to focus on the markets and/or the products that best serve their strengths. With fewer players, who exit from domiciles where they are subscale, you will need to look at the applicability of your bank group or syndicate as it relates to your country coverage. Knowing what you need, how to change from what you have and how to design your “go forward” strategy will all become part of a core skill set.” – by Stephen Harper, Senior Treasury Consultant, PMC Treasury
|
