To increase profitability, focus is on selling high-margin profitable products and services, and scaling down unprofitable operations

Thursday 12 September 2013, Amsterdam

Banks across the world are revisiting their operational strategies, branch banking models, distribution channels and expansion strategies to achieve cost efficiencies and increase profits. To increase profitability, focus is on selling high-margin profitable products and services, and scaling down unprofitable operations.
There has been increased emphasis on utilizing technology to improve profitability and achieve cost efficiencies; the role of technology has changed from being a process driver to a revenue generator. Retail banks are using technology to increase profitability by utilizing customer relationship management (CRM) systems and consumer analytics to identify new customer groups and offer customized products and services to targeted customers. In addition, key measures adopted by retail banks to improve operational efficiencies include an increase in information technology (IT) spending and upgrading IT systems.

Migration towards low-cost channels will help banks achieve cost efficiencies
An increase in real estate prices, labor costs, regulatory pressures and charges in customer preferences have caused banks to redesign their distribution strategies. The cost of a banking transaction made in-branch is significantly higher than a similar transaction made on online and mobile banking platforms. Web-based technology advancements, increases in internet and smartphone penetration, and changing consumer preferences have enabled the growth of online and mobile internet banking channels, and banks are focusing on these channels to reduce operating costs and improve profitability. As part of these initiatives, banks are launching loyalty programs to drive adoption of mobile platforms and social media sites.
Overall, there is a fundamental shift in product and marketing strategies. While mobile, internet and social media represent low-cost channels, branches continue to play a significant role in offering services and dealing with high-margin products. Over the next five years, it is expected that a realignment of product portfolio based on profitability and service-level expectations across channels.

High-growth markets and localized strategy will be critical success factors
Global banks are currently seeking opportunities to enter high-growth emerging markets to drive revenues. This is expected to intensify over the next five years, as competition to enter lucrative markets increases. However, driving profitable growth will remain challenging. Global banks intend to adopt localized strategies to drive profitability across emerging markets, and are expected to adopt a high-volume, low-margin business model to target the unbanked population. As a result, strategies involving low-cost channels such as mobile banking will gain importance.
At the same time, there will be a large middle and elite class which demands superior services and opportunities to invest globally. The challenge will be to create customer segment-specific strategies to remain profitable. It is expected that the decentralization in terms of decision-making processes by global banks execute strategies for local markets.

Increased M&A and partnership initiatives
Banks are divesting unprofitable business segments, product offerings and customer groups that are not part of their core business strategy. It expects an increase in the number of banks scaling down operations which are not profitable. This may include the complete closure of operations within a country, or selling off certain parts of a product portfolio, driving mergers and acquisitions.


This report offers:
•An insight into the global landscape of the card payments channels including market dynamics of card payments and a snapshot of the competitive landscape of this industry.
•An analysis of the market potential and key challenges for domestic networks including the key drivers, challenges and target markets.
•A breakdown of the key success factors for payment card networks such as tapping micropayments for growth, using promotions, cross selling opportunities and more.
•A look into an assortment of strategies adopted by domestic networks.


This will facilitate:
•The increasing of your knowledge of the factors affecting the payment card industry.
•Your understanding of the successes within the market and the challenges it faces.
•A clear understanding of market opportunities and entry strategies to gain or grow your market share in the cyber liability insurance industry in the UK.
•A greater understanding of the strategies adopted by the main players in the market


Target audience
•Retail Bankers.
•Suppliers to retail bankers.
•Contractor research organizations.
•Trade body, academia or other industry observers.
•Companies involved at any stage in the manufacturing, procurement and marketing process.