NEW YORK, Jan. 29, 2014 (GLOBE NEWSWIRE) -- The banking industry is at a pivot point where an increased focus on generating new sources of revenue through better connectivity with customers will be critical to drive future growth, as significant earnings improvements realized from cost reductions and rapidly declining expenses for loan losses are waning, according to KPMG's "Banking Outlook 2014: An Industry at a Pivot Point" report.
"Banks must switch from a business strategy anchored in defense – selling businesses, reducing headcount, and offshoring, in order to cut costs – to one centered on offense that is all about selling products and services that meet customer demands and needs," said Brian Stephens, national leader of the Banking and Capital Markets practice at KPMG LLP. "The banks that embrace change and systematically transform themselves to become more customer-centric will achieve a competitive advantage in the marketplace."
The KPMG report provides insight into the following areas that can help banks drive top-line growth:
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Find new ways to connect with customers, leveraging information technology to better understand what customers want and how banks can deliver it.
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IT transformation to provide the information needed to determine which services and products to deliver profitably, enable efforts to connect with customers, serve as the backbone of new products and services, drive efficiencies, meet regulatory demands, and defend against cybersecurity breaches.
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Improve data analytics and predictive modeling capabilities.
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Industrialize internal processes to reduce complexity, risk and cost while enhancing customer service.
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Leverage and empower internal audit to provide insights on how to improve operations and increase profitability.
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Step up use of cloud technology to contain costs and accelerate the pace at which they can affect change.
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Reexamine merger and acquisition opportunities, not only to squeeze further efficiencies from operations but also to achieve the critical mass needed to undertake the transformative changes required.
- Rebuild reputations in the aftermath of a financial crisis that many still blame on the financial services industry, so that they can better compete for customers in an industry built on a foundation of trust.
Next Industry Crisis: IT?
"The next industry crisis could revolve around IT, given the value and volume of the data banks generate, the attraction of that data to cyber thieves and vandals, and the complexity of banks' IT systems and their reliance on those systems – some of which are highly integrated while others are disjointed," said Stephens. "In addition, as more banks partner with third-party vendors and service providers – whose networks are connected to other banks, subcontractors and third parties – to expand their offerings and boost efficiency, the risk that an attack on one could morph into an attack on many is increasing."
About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative ("KPMG International"). KPMG International's member firms have 155,000 professionals, including more than 8,600 partners, in 155 countries.