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Some key challenges: Global financial services industry

Global financial services industry is facing many challenges due to new legal requirements, in the fields of compliance, banking and capital market reforms. To understand emerging new realities, this write-up presents an analysis regarding the key challenges being faced by the financial services industry. The confronted challenges include:

a) To cope up with the changes affecting Asset Management, requirements include that managers should obtain required authorisation to meet the operating conditions. At the same time transparency and reporting requirements are to be met in order to have smooth running of operations.

b) To understand, comprehend and comply with the newly-introduced revisions of regulatory regulations relating to capital requirements for banking organisations.

2. In the challenges presented by the environment and the climate of the global market place, one has to find new profitable ways for the satisfaction of consumers by building institutional efficiency to increase revenues.

3. To cope up with frequent mergers and acquisitions in the global markets, the newly-introduced directions bring out challenges such as:

a. Customer loyalty

b. Divesture

c. Strategic alliance

d. Right acquisitions

e. Business unit strategies to meet M & A objectives which must correspond to required objectives.

f. Cultural integration

g. Focus on building, defining, adopting and adopting high impact behaviour across the enterprise in order to have increased chances of success.

4. Defining the key performance indicators to achieve profitable growth. This factor also requires consistent growth, profitability, and employee engagement and promotion schemes for consumers. A comparison has to be made between promoters and detractors to build an effective system having identities.

5. To have Omni-channel interactions, marketing and branding structure is required to have secured profitability for consumers. The challenge here is to meet the requirements of globalisation and technological advancement. A further expectation to be met is consumer’s satisfaction.

6. Obviously the changed environment requires innovations in corporate and product structures. One may note there exists expected value brands in the financial services arena which can be subject to character tarnishing particularly where leaders in the business affect the interests of clients and that is why innovation is required to do something different (may be having a risk of failure sometimes). The environment demands the industry to be more creative (may be small firms confront difficulties); and the large-sized firms have to be aware about the risk that they can afford for being creative. Sometimes these pioneering efforts accrue advantages in brand leadership, stock valuation, consumer loyalty and market growth.

7. The challenge, inter alia, include keeping the growth momentum and acquiring talent. Keeping and expanding employee engagement would also be a real challenge since talent provides an additional advantage to lead the market place. The team work in this regard gains prime importance, because the environment that employees build creates competitiveness in the enterprise giving rise to a difference in the emerging markets. Thus the focus should be to provide world class experience and satisfaction to consumers, suppliers, distributors, partners, investors and shareholders.

This discussion leads us to conclude that Financial Service Industry confronts the following issues: 

— How to come up to a new level of growth and sustainable profitability in an environment of low interest rates;

— Rebuilding asset quality and strengthening their capital adequacy;

— Where to develop new and reliable sources of revenue;

— Enriching and increasing the business value of customer relationships at a time when customer behaviours and expectations are more demanding;

— Restoring public confidence in the industry;

— How to deal with aggressive and innovative non-bank competitors;

— Embedding a risk management culture into the fabric and habit of daily operations.

(The writer is an advocate and is currently working as an associate with Azim-ud-Din Law Associates Karachi)

Zafar Azeem, "Some key challenges: Global financial services industry," Business recorder. 2015-07-09.
Keywords: Economics , Economic system , Economic policy , Economic needs , Operating conditions , Banking organizations , Global market , Strategic alliance , Cultural integration , Profitable growth , Technological advancement , Transparency , Financial services industry , Karachi