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The Competitiveness Challenge in Banking and Financial Services: A Strategic Approach

Join Patrick McNutt & Associates for an insightful breakfast briefing on November 30, 2004, exploring the dynamics of competitiveness in the banking and financial services sector. This presentation delves into the definition of competitiveness, the challenges faced by retail banking, and strategies for navigating 21st-century competition. Gain valuable perspectives on balancing global and niche markets, regulatory burdens, and the importance of financial innovations. Understand how to manage value capture in an evolving landscape and tackle the reality of being either a global or local player.

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The Competitiveness Challenge in Banking and Financial Services: A Strategic Approach

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  1. The Competitiveness Challenge:Banking & Financial ServicesIBF Breakfast Briefing, November 30 2004 Patrick McNutt www.patrickmcnutt.com Patrick McNutt & Associates

  2. Outline of Presentation • Competitiveness Defined • The Competitiveness Challenge • Retail Banking, Financial Services & the Competitiveness Challenge • Understanding 21st Century Competition • Concluding Thoughts Patrick McNutt & Associates

  3. Competitiveness as ‘Hamlet’ without the Prince of Denmark • Viewed in terms of competition: nation & businesses; comparative advantage or ‘facilitated competition’ • Business decision rule: responding to market events: foreign sourcing & interdependence • Competing in a ‘geographic market’? Cross-border v financial markets ‘evolving as systems’ • Handling ‘regulatory burden’ in a new world of governance post-FSAP harmonisation Patrick McNutt & Associates

  4. The Competitiveness Challenge • Reality check: are you a global or niche player? • How to manage Irish businesses in the wider context of (say) the EU • Capture value and also enhanced foreign capacity to capture value (reverse engineer) • Big in local concentrated market v small globally • Based in Ireland (yes/no) but can act globally (yes/no)? Patrick McNutt & Associates

  5. Retail Banking, Financial Services & the Challenge • About being a different type of bank or financial institution: financial conglomerate or traditional retail bank + financial innovations • Strategy becomes more geographically focused • Strategy becomes more organisationally coherent • Do not destroy value or dilute EPS • Understanding 21st Century Competition Patrick McNutt & Associates

  6. Understanding 21st Century Competition:Micro-structure • Focus on costs + choice of cross-border entry model: subsidiary or branch network. • Obtain (international) economies of scale • How supportive is government policy? – Consolidation of retail banks at a national level? • Financial innovation = something new that reduces costs or satisfies customers’ demands • Impact of Technology on B2C and B2B • Competition leads to concentrated markets Patrick McNutt & Associates

  7. Understanding 21st Century Competition:Macro-structure • Working together solution: financial services and the regulators • Financial rules should be ‘competition-neutral’: let the market evolve • Globalisation & international competitiveness • EC’s FSAP: Realistic Target 2005? • CESR and Uniform implementation of Directives • EC Directives v US law Patrick McNutt & Associates

  8. Concluding Thoughts • Transposing into national law: ‘equivalence’ & co-operation amongst competitors • Pan-European Ombudsman v EU ‘SEC’ • Integration & Domestic consolidation: ‘ahead of the pack’ v ‘lagging-behind’ • Define Competition in a ‘conglomerates’ world • Lamfalussy flexibility: encouraging innovation • Competitiveness: as a bank or financial institution: what market should we be in? Patrick McNutt & Associates

  9. Pause and Reflect • “Ideal Goals Grow Faster Than The Means of Attaining New Goals Allow” deJouvenal Patrick McNutt & Associates

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