Banking is one of the traditional sectors that is struggling hard to cope with the changing technology landscape worldwide. The changing world economy is posing myriads of problems for bankers globally. Higher debts, uncertain interest rates and the market slowdowns have contributed to the challenges faced by the banking sector. Therefore, it is important to understand the most relevant challenges faced by bankers in the year 2016 and the ones that are predicted for the years beyond.
The most relevant challenges faced by the banking sector are as follows:
A top concern for the banking sector, macroeconomic risk is posing new challenges every day. Uncertainties in the macroeconomic environment add to the woes of the banking sector. Higher levels of debt across the sovereign and corporate world is adversely affecting the banking sector with many of the processes getting delayed, slower growth rates, declining economies and lack of clarity in interest rates.
Enforcing regulatory requirements is often expensive and not always effective. Bankers have realized the importance of strict regulations and tough controls. In recent times there have been many concerns raised about the adverse impact of the regulatory norms which is known to have eaten into management time and sometimes into the industry margins. Bankers worldwide are concerned how the regulatory norms may impact the innovation and diversity but applying rules and regulations at the right time to streamline specific processes should be good for the banking sector.
According to a survey, bankers have shown concern about the government`s interference in a multitude of banking operations for many reasons. There may be interference to raise revenues in times of financial crisis, or budget stress. Increasing investor protection and rebuilding the national tax base sometimes intrudes in the smooth functioning of banking processes. Added to that, uncertainty across political environments in the Europe and Middle East has impacted the banking sector. It also has an influence in lending policies and taxation principles.
Impact of Technology:
Bankers worldwide have shown concern about the outdated core IT systems as a concern for global bankers. The failure to invest in agile systems that foster the smooth functioning of the banking sector is also impacting banks worldwide.
Some innovators may provide better and more affordable experiences through a variety of channels which may distract customers and investors from mainstream banking. In addition to the top 4 challenges banking sectors worldwide also face some hurdles owing to competition in financial technology and more. Some of them are explored below:
Banks feel the pressure to satiate customers and meet their expectations at all times. Consumers today are more demanding than ever before and banks may not always be able to deliver the type of service that consumers are demanding.
Influx of Financial Technology Planning:
The rising competition from financial technology processes owing to the emerging number of FinTech companies are creating hurdles for the traditional banking sector. It is slowly but steadily changing the way traditional banking procedures are carried out. This in turn creates bigger challenges for traditional banks which may not be able to cope with the changes so easily.
There has been a rise in regulatory requirements and banks are spending more in a bid to be compliant and keep with the changing trends. They are striving at all levels to focus on effective management, streamlined processes and building sturdy systems to keep up with the rising demands.
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As the challenges continue to escalate, the traditional banking sector is striving to evaluate and augment transaction procedure to keep up with the fast pace of change across the banking sectors.