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Embracing the Future: International Banking in 2024

Market Analyst
22 Feb 2024
In the face of adversity and uncertainty, international banking has to adapt and innovate. The dynamic banking landscape presents considerable challenges that are not indomitable for leaders and institutions.

Understanding the Operating Model

Apath to improving financial performance, harnessing technology, and seizing growth opportunities requires a different operating model. This model should focus on three intertwined issues: balance sheet management, technology, and regulatory response.

  1. Balance Sheet Management: A strategic approach to balance sheet management can free up capital for reinvention. To do this, banks will evaluate and optimise their business mix, balance sheet strategy, legal entity structures, deal and partnership opportunities, and tax strategy.
  2. Technology: The strategic use of technology can assist in the modern banking environment. Banks should accelerate their technology transitions, embrace responsible generative AI (GenAI), and utilise cloud-based products to streamline operations and improve customer experience.
  3. Regulatory Response: Anticipating regulatory action is key to managing compliance effectively. Modernising compliance infrastructure and implementing upgraded systems can instil regulatory confidence.

However, adopting this new model also carries potential risks:

  • Short-term disruption: Implementing a new operating model can be disruptive, leading to temporary declines in efficiency and employee morale. Careful change management and communication are crucial to mitigate these disruptions.
  • Balancing agility with compliance: Simplifying operations for agility can create challenges in adhering to increasingly complex regulations. Rigorous internal controls and compliance oversight are necessary to navigate this potential pitfall.
  • Overlooking specialised expertise: A shift towards a leaner structure might lead to the loss of specific industry knowledge or niche expertise, potentially hindering decision-making in specific areas. Retention of key talent and cross-training initiatives can address this concern.

Here, leaders need to be more deliberate in allocating capital and liquidity while prioritising investments to address technology and regulatory issues. A simpler operational configuration allows for agility and reduced expenses, making it a necessity in the current banking environment. However, careful planning and execution are necessary to ensure the transition is smooth and minimises potential drawbacks.

Key Trends in 2024

In 2024, pivotal trends in international banking are believed to fall into the following categories:

  • Anticipating regulatory action
  • Delivering financial performance
  • Accelerating technology transitions
  • Embracing responsible GenAI
  • Addressing climate transition

Anticipating Regulatory Action

Reacting to regulators' requests can be costly and resource-consuming. Executives can streamline governance and controls systems and manual processes to lower costs and free up valuable talent. Implementing upgraded compliance infrastructure can instil regulatory confidence and reduce the risk of non-compliance.

Delivering Financial Performance

The search for different profitability levers should entail a data-driven approach to analysing risk-adjusted financial performance. This may involve new partnerships or nonbank relationships that can help optimise returns and maximise the narrative's value.

Accelerating Technology Transitions

Modern cores, digitised operations, and cloud-based computing remain promising sources of renewal and reinvention for the banking business model. Deciding when, how, and what systems to upgrade is a strategic decision that requires the input of the entire C-suite.

Embracing Responsible GenAI

Banks must seamlessly integrate GenAI model governance (a subfield of AI focused on creating new things, not just analysing existing ones) into their existing AI governance frameworks. Robust data ring-fencing practices are crucial to safeguard sensitive information. Additionally, ensuring compliance and comprehensive reporting will be paramount. The good news? The efficiency gains GenAI unlocks throughout the organisation can help offset the adoption costs.

Addressing Climate Transition

With the focus on renewable energy and reduced fossil fuel use, banks will integrate climate and sustainability into how they evaluate risk and opportunity in every financial product and service.


Global Banking Giants

This list is not exhaustive and does not represent all major global banking giants. Each company mentioned has its own unique strengths, weaknesses, opportunities, and threats (SWOT) that should be analysed before making any investment decisions. The banking industry is subject to complex regulations and economic factors that can impact profitability and stock prices.

JPMorgan Chase & Co. (JPM)

JPMorgan Chase & Co. is a global leader in international banking, offering a wide range of financial services to consumers and businesses.

HSBC Holdings plc (HSBA LN Equity)

HSBC Holdings is one of the largest banking and financial service organisations in the world, serving millions of customers through its global businesses.

Banco Santander, S.A. (SAN FP Equity)

Banco Santander is a leading retail and commercial bank, with a strong presence in Europe and the Americas.

UBS Group AG (UBS SW Equity)

UBS Group AG is a Swiss multinational investment bank and financial services company. It is one of the world's largest and most known banks.

Banco Bilbao Vizcaya Argentaria, S.A. (BBVA SM Equity)

BBVA is a customer-centric global financial services group that is evolving to meet the changing needs of its clients.


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