Regulatory divergence, geopolitical instability, and the possibility of a downturn have created a host of impending risks, requiring financial institutions to rethink traditional approaches to risk management.48 Additionally, nonfinancial risks remain top of mind for regulators and banks alike, and many have begun to sharpen their focus on this emerging subset of risks. This, in turn, will demand scale for profitability. View in article, International Monetary Fund, “Fintech: The experience so far,” June 27, 2019. As fintechs become mainstream, the issue of how best to regulate them has become more urgent. A podcast by our professionals who share a sneak peek at life inside Deloitte. View in article, Umar Faruqui, Wenqian Huang, and Előd Takáts, “Clearing risks in OTC derivatives markets: the CCP-bank nexus,” BIS, December 16, 2018. The Fed issued amendments to its capital planning framework Comprehensive Capital Analysis and Review (CCAR) and the Dodd-Frank Annual Stress Testing (DFAST), which should improve the design framework and boost the transparency of both.27. The daily volatility in SOFR reached record levels, but the 90-day average, which will be the basis for most transactions, was negligible.175. They often are merely “checking the box” to satisfy the compliance requirements of GDPR in the European Union or industry-specific regulations in the United States.180 In fact, privacy policies within banking are often so alike, it can be hard to differentiate between companies. They are increasingly taking a harder stance on misconduct and have set stringent expectations for professionalism and conduct.40. The industry will likely be bifurcated, with a few large, global investment banks—mostly in the United States—and another group focused on local markets and specialized segments. View in article, Ingrid Lunden, “Stripe launches Stripe Capital to make instant loans to customers on its platform,” TechCrunch, September 5, 2019. Bank leaders can start by contemplating what might be an optimal risk management model.49 They should first reevaluate their lines of defense to determine where duplicative efforts likely exist between the first line (where risk is owned and managed) and second (where risk is overseen) .50 Eliminating these siloed and redundant risk management practices could allow them to overcome cost and process inefficiencies and enable the first line to take on more ownership of risk. While fintechs are driving much of the disruption, incumbents are not far behind. Global banking-industry performance has been lackluster. View in article, “Top 1000 world banks 2018,” Banker, July 2, 2018. Wadhwani researches and writes on a variety of topics, including banks’ digital transformation and Deloitte’s annual banking and capital markets outlook. Though a positive momentum is anticipated for Asia Pacific deal landscape, Europe is expected to see a setback in deal activity. Leadership perspectives from across the globe. The combined effects of technological disruption, sweeping changes to the nature of work, demographic shifts, climate change, and possible Japanification could have serious implications for the banking industry. Last year, we urged banks to reimagine transformation as a multiyear process and “change how they change.” This message, of course, is still relevant, but as we enter a new decade, banks should also fortify their core foundation on multiple dimensions, including technology infrastructure, data management, talent, and risk management. View in article, David Jones, “Worldpay, First Data deals reflect globalization of payments space,” Mobile Payments Today, March 19, 2019. There could very well be greater competition from insurance companies, private equity firms, traditional asset managers, and fintechs in the corporate lending space. Bank tax departments spent much of the past year evaluating, understanding, and reporting the impacts of the US Tax Cuts and Jobs Act (“US tax reform”) that was passed in late 2017. Operational resilience is expected to remain on the regulators’ agenda globally.148 New regulations are forthcoming, such as the European Recovery and Resolution Regulation for central counterparties, with higher transparency rules being the result.149 However, the US equivalent of MiFID II seems less likely.150 But more active assessment and recommendations from regulators for digital asset trading could happen. 16. And, last but not least, concerns about climate change and social impact will force banks to reprioritize their role in society and sacrifice short-term gains for long-term sustainability. Marketing Trends for Banking Industry in 2020. by Dean Dougn January 14, 2020. Total assets were US$16.5 trillion, up by 3 percent from the previous year.6 Tax cuts and higher federal funds rates (until mid-2019) were significant contributors to increased profits. With divergence expected to continue, coupled with some geopolitical instability and the possibility of an economic downturn, banks can best prepare by continuing their compliance modernization journey using the latest governance, risk, and compliance technologies. Despite what happens, banks should remain true to their core identity as financial intermediaries: matching demand with supply of capital. Financial services clients expect meaningful and personalized experiences through intuitive and straightforward interfaces on any device, anywhere, and at any time. SOFR floating-rate notes have been issued by major entities such as the World Bank,171 MetLife,172 and Fannie Mae.173 Furthermore, SOFR futures volume on the Chicago Mercantile Exchange (CME) crossed US$1 trillion in 2019.174, However, recent liquidity challenges in the US repo market have raised some new questions about the stability of SOFR as an alternative. has been saved, 2020 banking and capital markets outlook View in article, Business Wire, “Visa acquires control of Earthport,” May 8, 2019; Zach Miller, “Mastercard gears up for cross border payment growth with Transfast acquisition,” Tearsheet, August 6, 2019. View in article, Advisor Hub, “Goldman Expanding Wealth Management to the Masses,” April 15, 2019; Economist, “Goldman wants to manage the assets of the middling rich,” May 25, 2019. View in article, American Bankers Association, “The state of digital lending,” January 8, 2018. However, finding the right merger partner in a similar peer group often remains a challenge. 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