IBT Partners has specialised knowledge in the financial services sector and provides financial, business and technical consultancy services.

The financial services industry has specific challenges that need appropriate expertise. Our know-how helps you achieve your international business and trade development goals. We offer you sector-specific knowledge, as well as our contacts and opportunities for networking.

Our services and solutions are tailored to the needs of each of our customers, please see Government and Corporate for more detailed information.

Read more about financial services sector:

• Background
• Current challenges
• Opportunities

Financial services background

Banking and insurance are the biggest categories in financial services, followed by fund management, foreign exchange, hedge funds, securities and derivatives. The success of individual companies operating within financial services is conditioned by their ability to master the sector’s complexity at both vertical and horizontal levels. Horizontal complexity arises from the inconsistency of regulation and policies at different geographical locations, including sub-national regulation. While vertical complexity is based on diverse specificities of the above mentioned categories. These variances are usually not visible at first sight, thus creating numerous hidden barriers.

The in-depth knowledge of the local business and legal environment is a necessary pre-requisite for your international expansion. Ignorance of country and sector-specific frameworks incur higher penalties than an initial investment in market research or in-field assistance. 

Current challenges in the financial services

The recent economic downturn was initiated by a financial crisis that has left behind many bankrupted financial providers. The survivors have not won the battle yet, as they have to face new challenges originating from the post-crisis agreements, such as regulatory changes.

Tougher regulatory standards are expected at both national and international levels. Increasing number of regulations comes from a need to better protect consumers and manage the risk more strictly, thus avoiding another economic crisis. The G20 has been working on a framework for global regulation of financial services, focusing on identification and management of systemic risks, transparency of trading and incentives, and new consumer protection leading to improvement of resolution and recovery. Other regulations propose introduction of bank levies and controls on executive compensation.¹ All these regulations threaten current business models and strategies of numerous financial services providers, squeezing their margins, making allocation of scarce resources an even more selective process. In order to respond to this challenge it is necessary to develop new advanced models for management and risk-adjusted allocation of capital, specific to regions and service category.²

Post-crisis arrangements also require a new model of "risk carrying" that would be more simple, efficient, and transparent. Better risk management will allow companies to deploy their funds more efficiently, and gain on new opportunities more quickly.³ Transparency in this case is crucial to regain consumer confidence. Financial service leaders will take this opportunity to explain their risk profile beyond legal requirements, explaining the underlying strategy and implications, thus improving both their transparency and risk management strategy.

Opportunities in the financial services

In order to keep pace with developments in the financial service sector, it is important to have access to actual, accurate and complete information and in-depth expertise. This includes trends, sector's key success factors, advances and innovations, supply and demand development, operational and financial risks, benchmarking, as well as regulations and opportunities for funds and grants. 

Some of the key opportunities and trends in the financial services industry include:

• Influence of ICT

  → Information and communication technologies have also shaped the development of financial services. To improve internal operations, next generation business applications will enhance the inter-enterprise communication. Security, identity and IT services that currently run at the network edge will migrate to cloud computing. As services will become digitally based, the need for outsourcing will take a different dimension – from outsourcing of cheap labour to outsourcing of cheap and high quality data centres⁴.
  → ICT will also offer new opportunities of services for customers, such as mobile payments.

• Operational efficiencies

  → Innovation is often driven by economic slowdown that pushes companies to reduce costs by integrating new and more efficient practices. The latest economic crisis is not an exception, providing the impetus to re-engineer more effective and sustainable business models and operations. Some operational improvements include:
  → Realising potential synergies through the development of product ‘hubs’ and greater use of centralised service centres and other sourcing options
  → More aggressive approach to product rationalisation, reducing needless management layers and identifying opportunities for integration and consolidation in areas such as reconciliation
  → Streamlining and simplifying to encourage tighter management control³.

• Transactional self-service as a norm

  → Implementation of modern technology is a source of competitive advantage for numerous companies, but some of these advances have become necessary requirements. Mobile and Internet users expect to be able to perform most regular banking services through their devices.⁴

• Advisory

  → As regular services are increasingly operated through ICT, staff working at bank branches and other offices are no longer there to perform operational tasks, but to advise consumers. As a consequence of low credit ratings and conjoint difficulties to attract new customers, financial services providers need to make the most of their current customers.² Consumers increasingly seek out advice targeted to their individual needs in order to correctly manage their finances and to avoid any related risks. This is done through a personal relationship with a customer, which is based on trust, honesty, fairness and consistency.⁵

• Personalisation and social media for marketing purposes

  → Surprisingly, the majority of consumers do not mind sharing their personal information with their financial services providers through social media, given that they perceive an adequate benefit. This can be in a form of coupons, contests, promotions, and services that can be tailored to individual needs of each customer⁵.

• Savings

  → New consumer trends will shape the offer of services significantly. Reflecting the recent development, consumers have realised the importance of saving, and they intend to permanently increase their saving rate⁵.

• Restructuring and non-traditional competitors

  → Restructuring will open up new opportunities for financially strong, recognised non-traditional competitors, who will threaten current business models in retail and payments. As some of the traditional source of funding will disappear, private equity funding in form of capital injections or strategic partnerships will also take place^3;4.

• ATMs extended features

  → ATMs will incorporate more features and services that are traditionally delivered at branches or through online banking. They will act as digital multi-service kiosks⁴.

http://www.pwc.com/gx/en/financial-services/challenges/regulation-and-compliance.jhtml

2) Cano, A. 2010. The Strategic Challenges in Financial Services. Online at Harvard Business Review blog: http://blogs.hbr.org/cs/2010/03/the_strategic_challenges_in_fi.html

3) PwC. 2011. Financial Services - Challenges Online at:

http://www.pwc.com/gx/en/financial-services/challenges/index.jhtml

4) Verizon. 2010. Top Trends in Financial Services. Online at: http://www.verizonbusiness.com/resources/factsheets/fs_trends-of-the-decade-for-finance_en_xg.pdf

5) Mintel.2010. Mintel Comperemedia predicts five financial services trends for 2010. Online at: http://www.mintel.com/press-centre/press-releases/478/mintel-comperemedia-predicts-five-financial-services-trends-for-2010

Contact us

If you would like to know more about our financial services sector expertise, please contact us at
finser@ibtpartners.com
for additional information.