There is no doubt the financial services industry has been dealt a heavy blow by the economic crisis of late 2008 and the continuing downturn in the housing and stock markets which preceded it. The most challenging set of conditions in nearly a century confronts the financial services industry, and the degree to which the operating environment and global financial landscape have been altered by the turmoil is still unfolding.
Some institutions have been brought to their knees; others have been hobbled. Still others are tenaciously hanging on, surviving the crisis by a number of different techniques, including cost and workforce reduction strategies, strategic investment delays, curtailing market initiatives and M&A activities. But is it enough to simply hunker down and try to weather the storm? Is waiting out this tumultuous period a viable option for the financial services industry? When the dust settles on this period, it is the consensus among experts, the media, and research organizations that this crisis will have been transformative; that is, the financial services industry and the conditions under which it was operating before will not be the same.
What implications does the funding freeze have on the scope of business? What are industry perceptions of the crisis, their predictions on a changing regulatory framework, and the course of action for rebuilding confidence and trust in this wounded sector? What is the future of innovation? What are industry players doing to confront this new reality? How are they adapting to an economic landscape that is undergoing a process of redefinition?
Deloitte conducted an online survey of financial services industry experts from around the globe in order to present a picture of the industry from the inside out, to get a view from the trenches, so to speak, and to begin the process of gaining a clearer understanding of how these institutions are coping. This survey aims to capture the thoughts of leading executives about what institutions need to be doing to turn this transition to their advantage.
We supplemented our research with insights from in-depth interviews with senior management in the banking, insurance, and investment management sectors, as well as with interviews with Deloitte subject matter experts. Focusing on several key areas, a story emerges from the responses, which we tell in the following pages. It is a story of an industry at the crossroads. The GFSI research indicates that even while there is almost total agreement about the length and severity of the downturn, effective strategies for thriving in this period are scarce and the industry is focused on survival more than anything else. It is Deloitte’s opinion that it is not enough to wait until the chaos blows over: businesses must confront the reality of a redefined global economic climate and begin strategizing ways to thrive.
Contents
1 Foreword
2 Introduction
3 Capital sources and funding
12 New regulations and stakeholder priorities
18 Retooling risk management
21 The future of innovation
23 Conclusion
24 For more information
25 Deloitte member firm Financial Services Industry leaders
