The Future of US Banking

What is the long-term future of banking? This question was not at the front of bankers' minds during the crisis, when the imperative was survival. Now that the industry appears to be emerging from the acute credit and liquidity crisis, however, we need to address the future. How will customers' needs evolve? What macroeconomic and regulatory conditions will prevail? Which financial services business models will thrive?

In the Oliver Wyman report, The Future of Banking, Partner and Head of North American Financial Services, Michael Poulos explores the forces that will shape the U.S. banking industry in the post-crisis era - a period after the peculiar crisis-related features of the financial environment have abated. Six distinct long-term trends are outlined:

The end of declining interest rates
Consumer deleveraging
Increasingly active regulation
Aging populations
The end of credit risk-free sovereign borrowers
Diverging growth rates between developed and emerging markets

In addition, these trends will drive major changes in the industry over the medium term, including: consolidation, particularly in developed markets, to remove excess capacity; innovation of offerings and service models, to restore margins to acceptable levels; and migration of relative profitability from mass-market to affluent customers, and of growth from developed to emerging economies. The Future of Banking examines each of the six major trends in detail and the headline implications for bankers.