Banking 2015: a classic strategy battle of scale vs focus

Abstract

Purpose

This article examines the trends that will likely define the future of the retail banking industry in the next decade and the strategic imperatives for success.

Design/methodology/approach

Scenario technology and trend analysis.

Findings

Large players will generate higher aggregate profits by reaping the benefits of super scale, while niche players will aggressively pursue the most desirable customers by addressing their needs in distinct ways – those in the middle will get squeezed.

Research limitations/implications

Combining the results of the IBM CEO survey with market research and interviews with industry executives, the authors have identified five key areas of ongoing innovation that have the potential to fuel enormous growth for the retail banking industry: retail payments, mortgage loans, account and product integration, global expansion and the customer experience.

Practical implications

There are four strategic imperatives banks must follow to cultivate innovation and position themselves for sustainable growth.

Originality/value

All banks, but small and medium sized banks especially, will have to specialize and focus on their core strengths – those activities in which they excel – and partner with best‐in‐class specialists for everything else.

Citation

Hedley, K., White, J., Petit dit de la Roche, C. and Banerjea, S. (2006), "Banking 2015: a classic strategy battle of scale vs focus", Strategy & Leadership, Vol. 34 No. 3, pp. 51-58. https://doi.org/10.1108/10878570610700875