Deloitte 2004 Banking Industry Outlook Anticipates Regulatory Perfect Storm, Renewed Investment in T

Thursday 18 December 2003 18:46 CET | News

As most major economies are beginning to grow, banks are revising their focus and implementing a series of new strategies for 2004. After years of implementing cost-cutting measures due to weak business conditions, banks will now concentrate on revenue generation strategies.

But even as the economy improves new obstacles continue to emerge that banks must overcome to be successful. A new report issued today by Deloittes Global Financial Services Industry practice, Global Banking Industry Outlook, details the challenges and opportunities facing the banking industry. The annual report, compiled by a global editorial board of Deloitte practitioners serving banks, identifies the Top Ten Issues that are most critical for boards and top management to address in the upcoming year. The complete list of Top Ten Banking Issues for 2004 as outlined by the global editorial board of Deloitte practitioners are as follows: 1. Capturing the Promise of the Customer. Increasing the share of wallet from existing customers has become the order of the day. Having learned from failed Customer Relationship Management projects, banks are emphasizing more targeted technology investments and high-quality service. 2. Leveraging Human Capital to Increase Profitability. Innovative analytical methods are putting a new face on traditional performance measurement. These tools can identify the role of personnel issues in driving business outcomes and identify the drivers to improve results. 3. Offshoring. Locating operations in lower-cost locations, such as India or China, can dramatically reduce operating costs, while maintaining quality. For banks able to master the complexities, the benefits are substantial. 4. Basel II. Although not due to be implemented until 2006, leading banks are well underway in preparing to comply with the Basel II Capital Accord. The new requirements are a catalyst for banks to upgrade their credit and operational risk management processes. 5. Mastering the Regulatory Perfect Storm. Banks are confronting a tidal wave of regulatory changes including Basel II, International Financial Reporting Standards, the Sarbanes-Oxley Act, and anti-money laundering legislation. A comprehensive approach can better ensure compliance and control costs. 6. Corporate Governance. The movement toward stronger corporate governance is accelerating across the globe, heavily influenced by the passage of the Sarbanes-Oxley Act in the United States. Banks should seize this opportunity to strengthen their internal controls and enhance their disclosures to investors. 7. Implementing IAS 39: The Challenge of Fair Value Accounting. Although the rules have not yet been finalized, banks in Europe and many other parts of the world will need to adopt International Financial Reporting Standards in the coming year. The impacts will be widespread, affecting information systems, credit assessment, and business operations. 8. Investing in New Technology. Technology budgets have been scaled back over the last several years in the name of cost reduction. To remain competitive, banks will have to renew their commitment to investing in new technology strategically -- to reduce costs, improve efficiencies, and strengthen revenue-generating initiatives. 9. Building Confidence Goes Beyond Compliance. As the custodians of societal savings, banks always will be held to the highest standards of conduct. In the current environment, in which the confidence of key stakeholders has been shaken, banks will need to identify and adhere to best practices, regardless of minimum regulatory requirements. 10. Maintaining a Strategic Focus. While most banks have a strategic view, few have a clearly stated governing objective or a formalized strategic plan to achieve it. Delivering sustainable economic value will require continuous and consistent focus on performance standards by senior management.

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Categories: Payments & Commerce | Payments General
Countries: World
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Payments & Commerce