It has been almost eight years since the financial crisis and our industry remains in a state of flux. Nor are we just dealing with the aftermath of the crisis. Other powerful forces are reshaping our industry as well, from market transformations to radical technological change. As bankers, it can be difficult to know where to focus. We know. At UBS we face the same challenges ourselves.
Seeing the forest for the trees
Strategy is a mentality, and we have to be alert at all times. One good way to deal with the increased complexity is to look for common patterns and denominators. By grouping things into a manageable set of categories, we can gain insight into where best to concentrate our efforts. When considering industry transformation, we think it can be useful for banks to think in terms of the following four mega trends:
Regulation: Hardly a surprise, but it remains a fact that regulation will continue to have a significant and transformative effect on how we work and the cost of doing business. Banks must continue to stay on top of developments. Regulatory change is also increasingly affecting how we measure success. This is resulting for example in changing KPIs: Today return on allocated equity and client economic profit are more than just buzzwords.
Digitalization: We have all gotten used to a relatively fast pace of technological change in our professional and private lives. This is likely nothing compared to what is coming. From encouraging new competition to providing new ways of interacting with clients to radically altering the underlying fabric of the financial system, technology is set to massively disrupt how we work. All banks will be severely challenged not just to understand the new technologies, but also to integrate them into their operations, and adapt their value propositions and business models accordingly.
The new client: Clients are changing too. The Internet and mobile technology have altered how they interact with us. Across all generations clients have higher expectations in terms of speed and quality of service, transparency and relevance. They are also much better informed – making them more stringent judges of our performance. On top of this, the younger generations of digital natives and Millennials who make up our future client base are growing up with different value systems, as exemplified for example by the sharing economy or the Internet of things. Banks that do not fully understand what their clients expect will fail.
The new banker: Finally, as we are entering a new world of banking, we need a new kind of banker. To be successful, bankers of the future will have to be better trained, and they will increasingly be required to prove their qualifications through external certification. They will need to adapt very quickly to evolving new mindsets and anticipate the resulting future needs of their clients. While it can be easy to overlook this in the press of daily business, we believe banks must quickly come to terms with the question of how best to prepare staff for the challenges ahead. Those who do will be at an advantage.
While it may seem overwhelming at times, we think there is also a positive side to all this change. Indeed, you could argue that this is a great time to be a banker, because it means having the opportunity to be involved in the creation of something new.