The 11th edition of our annual flagship publication, the State of the Financial Services Industry report has been launched. The report delivers a snapshot of key industry trends and developments, based on qualitative insights and objective performance analytics related to shareholder value performance within financial services.
In the report last year we predicted that the party in financial services was about to end and this has come to pass in global credit markets. In the midst of the current liquidity crisis, the outlook remains challenging for 2008 and beyond. Firms in the financial services industry are facing a toxic mix of diverging growth paths between low-return and high-risk economies and new potential dislocations ahead. In this environment, insights into the characteristics of past under- and out-performers reveal routes to future value creation. For the short-term, risk, liquidity and funding management have taken centre stage. Firms gearing to new growth are required to find the right balance of focus and innovation, with different implications for specific business models. Much of this new growth will arise at intersections of traditional businesses. The depth of the recent crisis exposed a set of specific failings in now standard business practices that must be addressed, but we do not expect the long-term trends of modern finance to reverse. Looking beyond established trends, two major new forces for change should be watched closely: Giants in emerging markets and sovereign wealth funds.
For the fifth year, the report has been launched around the World Economic Forum Annual Meeting in Davos. John Drzik, CEO of Oliver Wyman, Scott McDonald, Head of our Financial Services business unit and Mathis Cabiallavetta, Vice Chairman of MMC, hosted our annual luncheon and roundtable for leading Financial Services industry executives on January 23. The global media launch, with planned press briefings in New York, Asia and potentially other markets took place on January 24.