After nearly six years of downsizing and structural consolidation, global investment banks now face less external pressure and can begin to turn their attention toward growth. Now there is an opportunity, particularly in Asia, for banks to reflect on their competitive positioning and key differentiators.
Fundamentally, the C-Suite of today need to decide what type of bank they wish to run, and what they need to do to create it, and work in unison to achieve its goals.
In the short- to medium-term, banks need to take advantage of opportunities such as: building on existing strengths in core markets to drive profitable market share; reducing duplication of effort across business lines; redeploying resources to focus on profitable businesses and products; achieving synergies with other growing parts of the business; and designing new products to address long-term capital market structural changes. This requires an IT team that oversees the process in a holistic manner.
Redeployment of scarce growth capital means changing the business mix. Previously the prevailing thinking was that "bigger is better", with little consideration for profit margins. In the current environment, driving return on investments and return on equity in the face of shrinking balance sheets is a major challenge.
This means being selective. Expansion doesn't just mean M&A. It can mean partnerships or in-house development of new, more sophisticated products and capabilities that aren't opaque. Improved product offerings can unlock profit and growth capacity in both domestic and international markets. Partnerships with disruptive technologies that provide innovative financing also represent potential opportunities. The benefits of these relationships include faster time-to-market and lower entry costs. The key is to be client-centric, transparent and strategic.
Through taking advantage of these opportunities, banking executives can deliver the dual goals of squeezing maximum profit out of their current operations and safeguarding their future through growth and expansion.
Sign up for CIO Asia eNewsletters.