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In recent years, the banking sector has been shaken to the core in terms of profitability, image and trust with its customers. The most recent crisis, in 2007, led to the sector being required to review its business model, with a strong need to strategically redefine the various business area in terms of consumption of equity capital. The relationship between Finance and Investment Banking and Retail Banking has evolved, with a new target set by the regulations governing better defined boundaries between the two worlds.
The insurance sector, less severely affected, has undergone the same far-reaching regulatory and organisational revamp through the implementation of Solvency 2.

The challenges facing the banking and insurance sector are crucial for redefining the business model in terms of compliance, with regulations that continue to become stricter and more ongoing than ever.
  • The first significant challenge is to guide profitability/risk and regulatory constraints with a need to anticipate regulatory requirements so that any opportunities they represent can be taken. Financial institutions are required to adapt their governance, organisation and processes to meet the new requirements in capital cost. They are also obliged to meet the proposals aimed at reducing systemic risks, such as the new BCBS 239 reforms affecting large institutions from 2016.
In recent years, the banking sector has been shaken to the core in terms of profitability, image and trust with its customers. The most recent crisis, in 2007, led to the sector being required to review its business model, with a strong need to strategically redefine the various business area in terms of consumption of equity capital. The relationship between Finance and Investment Banking and Retail Banking has evolved, with a new target set by the regulations governing better defined boundaries between the two worlds.
The insurance sector, less severely affected, has undergone the same far-reaching regulatory and organisational revamp through the implementation of Solvency 2.

The challenges facing the banking and insurance sector are crucial for redefining the business model in terms of compliance, with regulations that continue to become stricter and more ongoing than ever.
  • The first significant challenge is to guide profitability/risk and regulatory constraints with a need to anticipate regulatory requirements so that any opportunities they represent can be taken. Financial institutions are required to adapt their governance, organisation and processes to meet the new requirements in capital cost. They are also obliged to meet the proposals aimed at reducing systemic risks, such as the new BCBS 239 reforms affecting large institutions from 2016.
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  • The second challenge for the sector is to restore the trust of customers and direct it towards a positioning and an offering focused on customers. Customers are increasingly mistrustful of the financial world and have become more and more volatile as the result of new technologies. Customer demands are growing with methods of comparing the ever-increasing number of offerings. Hence the banks need to update their offerings by type of customer, as well as develop cross-selling between business lines, find new ways of gaining customer loyalty and come up with new products, albeit with the need for transparency in selling those products.

  • The third major challenge for the sector is the issue of revamping its organisational and operational model, with the dual need to improve both the profitability and quality of its product services. Banking finds itself obliged to seek out new growth areas and industrialise its processes, as well as how to improve the quality of its relationship with customers and package increasingly competitive products in the context of the Basle requirements on the use of equity capital and the obligations regarding liquidity. All that in a business that has seen its commercial margins eroded significantly, combined with the ongoing constraints of technological renewal and innovation.
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