How will financial services firms look in 2010? What will be the key market drivers and operating challenges? A Deloitte Report provides some interesting perspectives:

Key Market Drivers

• New Asset Class will emerge – Capital markets across the world are seeing a centre of gravity shift towards new types of investments like PE and Hedge Funds. Mass Market offerings like MFs will be forced to rethink their products and services.
• Aging Population – The world’s wealthiest generation is quitting and preparing for an indulgent retirement. Very few financial services firms are prepared for this change. Financial institutions of today are largely designed to serve people who accumulate assets and holding assets for the long term. Retirement assets are supposed to reach $ 25 trillion in 2010.
• Payments: P&L Pain or Pride – Banks earn currently 40% of their total revenue from handling payments. Internet-based services continue to eat into this market, cutting banks out of handling and conversion fees.
• Emerging Markets – Opportunities, no guarantees – Emerging markets provide opportunities for growth but they need to adapt the business model to operate profitably.

Key Operating Challenges

• Offshoring - Financial services will offshore their business processes by integrating offshore and onshore operations to create a global delivery model.
• Internal Control - Building the ability to build and consolidate beyond compliance demands.
• Struggle for growth through enhanced customer relationships – There will more service/process innovations rather than product innovations.