Top challenges for all aspects of the industry include:

  • Regulatory compliance
  • Data security
  • Risk management
  • Mobile technologies changing the way consumers access their money
  • Global economic conditions

Robert Half surveyed executives in the U.S. financial industry and presented the perceived challenges and responses below in a Feb. 2015 post.

  • Regulatory compliance will continue to be a major challenge. Financial organizations are hiring more “risk, compliance and internal audit professionals.”
  • Bank lending is increasing in all areas, especially commercial real estate. Consumer credit is also expanding and mortgage lending is strong.
  • Mobile applications are disrupting the traditional ways of banking and “mobile payment solutions and digital wallet services” are replacing “traditional currency and credit cards.”
  • Data security is a top issue which continues to cause problems for the entire industry.

A recent survey by Raddon Financial Group found that almost half of U.S. consumers think nontraditional providers (such as Apple, Google, Amazon and PayPal) “will drive innovation in the financial services industry,” but that less than 40% say they would consider using such a source at this point. However, younger consumers are more likely to use these than older generations. (“Can You Compete With Apple, Google & Amazon?” by Michael Bartlett, Credit Union Journal, Nov. 9, 2015)

Retail banks
PcW’s Strategy& reports on challenges at:

  • Profits which have been based on “increasing consumer lending” can no longer be relied on. Retail banks “need to attract more depositors in order to stabilize their books, and lenders need to have a much deeper understanding of their customers and risk profiles before they lend.”
  • Additionally, the industry is “increasingly competitive and cost-conscious.” PwC feels that “banks must deliver fundamental performance improvements” to remain profitable.
  • Industry-wide challenges include: “specialist players and captive-finance providers – especially in product manufacturing and distribution;” a “better understanding of customer needs and risks,” including what level of service each customer segment needs; “faster response to government and regulatory changes;” improvements in efficiency; and expansion into “the emerging markets” of “the wealthy.”Another Strategy& report on retail banking trends says that increasing “commoditization of retail banking products” is “putting pressure on banks to distinguish themselves in an intensely competitive, low-growth, low-margin environment.” Because of this banks are shifting “to a more client-centric strategy.” (2015 Retail Banking Trends: Excellence & customers.

Commercial banks

  • PcW’s Strategy& reports on challenges at
  • It finds that businesses “are demanding more customized products at a lower price point and with greater levels of service.” Additionally, “the flow of capital in the market” had been reduced and will “require a more in-depth view of risk.”
  • PcW feels that “commercial banks will need to fundamentally restructure in the coming years to enable them to deliver a profitable business as the market improves.”
  • Challenges include “transitioning from a product-focused to customer-focused organization,” and “improving operational efficiency” to “reduce costs and improve profitability” without “damaging customer service.” Banks will also need “to substantially step up the way in which they deliver risk management across their organizations.”

American Banking Association’s Economic and Policy Research team produces numerous statistical reports and policy papers.

Major findings:

  • Data security is a major concern of consumers.
  • Mobile banking is growing, although brick and mortar banks are still the norm.
  • Many banks are cancelling or holding off on new products, due to regulatory uncertainty.
  • Predictions regarding industry growth from earlier this year are holding up: income and loan activity are up across the board, equity capital is up, and assets declined in the third quarter.

What are they doing about cost reduction now:

The financial services industry in general needs to:

  • “Automate or standardize core processes, taking advantage of rapid advances in technology such as artificial intelligence.” Oliver Wyman, “Managing Complexity: The State of the Financial Services Industry 2015,”
  • Financial institutions and banks are looking at new shared services and finance outsourcing models to improve efficiency, simplify transactional activities, improve risk management, become more agile, and improve service quality and capital efficiency. (“Shared services can strengthen more than the finance function,” Accenture