Page 8 - Banking Outlook 2014 - An Industry at a Pivot Point

6 | Banking Outlook 2014: An Industry at a Pivot Point

FDIC-Insured Institutions 2004–2013

9500
8976 8833
9000
8680
8534
8500 8305
8012
8000
7658
7357
7500
7083
7000 6891
6500
6000
5500
5000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Federal Deposit Insurance Corp., Quarterly Banking Profile, December, 2013.
The pivot: Defense to offense
History is replete with companies that failed to pivot when circumstances required it, including, just in the
past decade, numerous companies that were slow to embrace digital technologies: photo film makers who
didn’t appreciate the appeal of digital photography, home video distributors that resisted streaming, music
businesses that relied on CD and vinyl record sales, and book distributors that stuck too long with bricks-
and-mortar strategies.
As banks pivot from defense to offense, they will have to move from what has essentially become survival
mode—coping with the fallout from the credit crisis and complying with new regulations—to relentlessly
focusing on change that drives top-line growth. Among other strategies, this shift will require that banks: The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 227982
• Find new ways to connect with customers, leveraging information technology to better understand © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A.
what customers want and how banks can deliver it.
• Improve their abilities to effectively manage and leverage data, including their analytics and
predictive modeling capabilities.

• Industrialize their internal processes to reduce complexity, risk, and cost while enhancing customer
service.
• Step up use of cloud and other emerging technology to contain costs and accelerate the pace at
which they can effect change.
• Reexamine merger and acquisition opportunities, not only to grow their businesses and squeeze
further efficiencies from operations but also to achieve the critical mass needed to undertake the
transformative changes required of them.
• Rebuild their 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.
Let’s look more closely at some of the forces we expect will shape the industry in 2014.