Skip to content

SMARTER GROWTH STARTS AT SHIFT. JOIN US IN SAN DIEGO FROM OCTOBER 25-28!

  • Sign in toSeismicSeismic
  • Sign in to
  • Sign in toLiveSocial by SeismicLiveSocial by Seismic

CHOOSE YOUR LANGUAGE

  • English
    • Enablement Cloud

      Meet the unified solution that’s igniting revenue growth for customer-facing teams.

      Learn More
    • PRODUCTS

      • Sales Content Management
      • Learning & Coaching
      • Buyer Engagement
      • Content Automation
      • Strategy & Planning
      • Enablement Intelligence
    • PLATFORM

      • Platform Overview
      • Integrations
    • Why Seismic?

      Good question! Find out why leading analysts and 2,200+ customers love our software.

      Learn More
    • USE CASES

      • Sales Enablement Teams
      • Sales Teams
      • Marketing Teams
      • Customer Service Teams
    • INDUSTRIES

      • All Industries
      • Financial Services
      • Healthcare & Life Sciences
      • Technology
    • Read Their Stories

      Read how global customers from all different industries thrive with Seismic.

      Read Their Stories
    • CUSTOMER STORIES

      • Genesys
      • Deluxe
    • FOR OUR CUSTOMERS

      • Magnitude Customer Hub
      • Seismic University
      • Seismic Community
    • About Us

      Discover who we are, what we value, and how we work at Seismic.

      Learn More
    • ABOUT SEISMIC

      • Careers
      • Leadership
      • Diversity & Inclusion
      • Partners
      • Aftershock Store
      • Contact Us
    • NEWS

      • Newsroom
      • Analyst & 3rd Party Reports
      • Shift 2022
    • What is Sales Enablement?

      New to sales enablement? No problem. Learn what it is and why it matters here.

      Learn More
    • WHAT'S NEW

      • Blog
      • Events & Webinars
    • COLLECTION HUBS

      • Resources Center
      • Enablement Explainers
      • AI-Guided Selling
      • Social Selling
      • Financial Services
      • Sales Acceleration
  • Get a Demo
Return to the Blog
One Seismic

The digital transformation of global banking

McKinsey just released its annual review on the global banking industry, and the findings and projections within it are less ...

Seismic
Seismic
December 15, 2016

McKinsey just released its annual review on the global banking industry, and the findings and projections within it are less than spectacular. In fact, one could say they are downright depressing. The three major factors contributing to banking’s phase of stagnant growth are low interest rates, digitization and regulation, which have been popular topics of discussion for quite some time. The review segmented banks according to geographic and economic environments, with the conditions of those within developed markets varying from those in emerging ones. And while McKinsey’s report analyzed the negative short and long-term effects of those prior-mentioned headwinds, it also outlined three themes for addressing the transformation needs of institutions: resilience, reorientation and renewal.

Some eyebrow-raising figures surrounding the impacts of low rates and digitization between now and 2020 are:

  • Developed-market banks are at risk of losing roughly $90 billion (25 percent) in profits to both factors
  • Emerging-market banks are more vulnerable to the credit cycle, thus a potential drop in profits within Brazil, Russia and China could total $50B
  • Due to digitization alone, profits in Europe and the United Kingdom could fall from $110 billion to about $50 billion
    • U.S. and Japanese profits could drop 18 percent
  • In terms of return on equity (ROE) minus cost of equity (COE), U.S. banks could see a 2 point gap while European and UK banks an 8 or 9 point one
  • In 2015 the global industry’s return on equity ticked up slightly to 9.6 percent, roughly returning the cost of capital

McKinsey’s position on tackling this adversity and, to an extent, malaise requires that banks commit to no less than a holistic reinvention, a complete reimagining and reengineering of operational processes, customer strategies and organizational structures. The consultancy sees the role of technology substantially increasing within firms embarking on this transformation, with content automation via a high degree of IT infrastructure investment as a method for reducing costs.

Amplifying and expanding the digital customer journey is also an avenue that McKinsey sees as necessary to achieve scale, reduce costs and improve service delivery. Better service leads to stronger customer satisfaction, and according to the report’s research, a 10-percentage-point rise in customer satisfaction can increase revenues by 2 to 3 percent.

Finally, creating a culture of change and innovation is critical to developing and employing the digital skills customers want. Bank leaders must collectively emphasize the importance of values and vision in order to foster a cross-functional, and sometimes unconventional, organizational construct.

The specific themes and associated initiatives outlined by McKinsey are as follows, with the first already the focus of many developed-market banks and the next two present among industry leaders only.

Resilience to ensure short-term viability of business: protect revenues through repricing and greater intermediation; downsize and reduce short-term costs; manage capital and risk; safeguard the customer franchise as well as human capital

Reorientation to fundamentally rethink the business model of the future: redefine the customer experience; rethink the operating model; meet the spirit of regulation; find pockets of growth

Renewal to develop fundamental skills: create a motivating culture of change, with shared vision and values; develop new organizational constructs; develop the digital skills needed to compete

As 2017 approaches, the pulse of global banking is slow, steady, but slow. McKinsey sees the future two ways, and immediately mitigating the impact of market headwinds to avoid continued stagnation and eventual extinction is the only manner by which long-term success can be sustained. There may be no better New Year’s resolution for an industry that’s been operating the same way for decades.

  • banking

Related articles

Navigating Uncertainty: How to train and coach your reps through change

Why efficiency today will pay off tomorrow
Read More: Navigating Uncertainty: How to train and coach your reps through change

Navigating Uncertainty: Driving efficiency in a downturn

A conversation about doing more with less
Read More: Navigating Uncertainty: Driving efficiency in a downturn

How to drive investment banking deals with sales enablement

Investment bankers can build better relationships and accelerate deals with the right enablement tools.
Read More: How to drive investment banking deals with sales enablement

If you made it this far, we must be striking a chord.

Get a Demo
Seismic
  • Product
  • Seismic Enablement Cloud™
  • Sales Content Management
  • Learning & Coaching
  • Buyer Engagement
  • Content Automation
  • Strategy & Planning
  • Enablement Intelligence
  • Solutions
  • Sales Enablement Teams
  • Sales Teams
  • Marketing Teams
  • Customer Service Teams
  • Resources
  • Blog
  • Resources Center
  • Trending Topics
  • What is Sales Enablement?
  • What is AI-Guided Selling?
  • What is Social Selling?
  • Integrations
  • All Integrations
  • Google
  • Microsoft
  • Salesforce
  • COMPANY
  • Contact Us
  • Careers
  • Trust Center
ISO 27001 Certified by Schellman
  • © 2022 Seismic
  • Terms of Use
  • Privacy Policy
  • Follow us on Linkedin
  • Follow us on Instagram
  • Follow us on Twitter
  • Follow us on YouTube
  • Follow us on Facebook