Living with New Realities: Creating Value in Banking 2009

The financial crisis has slashed the banking industry’s market capitalization by $5.5 trillion—the equivalent of about 10 percent of global GDP. The losses are staggering, but they are only half the story. The crisis will prove to be as transformative as it is destructive. The report describes several new realities that are changing how and where banks compete. In the postcrisis world, the much maligned universal-banking model will reestablish its primacy. Large banks will still loom over the landscape, but they will be multilocal rather than global titans. Banks, in general, will move forward by returning to the past. Their business models will reflect a more cautious, highly regulated, and less risk-oriented environment. This does not mean that banking will be dull or easy. If anything, it will become more demanding as banks get back to the business of focusing on their customers.