Trends show that in 2018 and beyond, the financial industry will continue to experience rapid and even fundamental changes. The forces of globalization and technology have already pushed the financial industry into many uncharted territories. Money flows faster than ever thought possible. The push for decentralization has led to a cryptocurrency revolution. Customers expect instant results. Governments are fast imposing new regulations while disruptive competitors enter the landscape. In the coming years, those who are able to navigate these challenges will enjoy prosperity. The imperative will be keeping pace with change.
The financial industry has reason for optimism, as detailed by Deloitte. Economists expect real GDP growth in the U.S. to exceed 2 percent for the next several years. Global GDP increases will be even greater, led by emerging Asia, which is expected to enjoy a sustained GDP growth of 8 percent. For globalized banking, the growth outlook offers many reasons for optimism. Chief among them is the expected tightening of labor markets in the U.S. and Europe. Incomes should grow substantially, and the banking sectors profits will grow right along with them. Business investment is also expected to rise, and U.S. tax reform promises incentives for repatriated corporate earnings, which could be a significant boon for U.S. financial firms.
Though the economic picture looks rosy, Deloitte notes that financial firms must recalibrate to take advantage of this growth. The rapid economic and technological changes will require financial firms to become more strategically focused. They will need to keep pace with and strive to be in the vanguard of technological change. Only companies with superior agility are likely to survive this new, highly competitive environment. Those that do can become powerhouses.
For banks to succeed, Deloitte points to six macro themes they must focus on. Customer centricity, regulatory recalibration, technology management, mitigating cyber risk, fintechs and bigtechs, and reimagining the workforce are moving parts management must harness. Many of these areas require long-term planning. A great challenge exists in running a bank and tackling near-term goals and obstacles while continuing to position the bank to take advantage of the opportunities that beckon from just around the bend.
For excellent financial companies that have the vision and capacity needed to thrive in a quickly growing and dynamic environment, 2018 and beyond offer opportunity. Increases in the world economy and money flows mean topline growth. Management’s ability to adapt will determine if the growth transfers to the bottom line.