Speaking at the annual British Bankers' Association conference, KPMG's EMA head of financial services, Bill Michael, outlined his vision of how global banking will change over the next decade.
"Libor was a game changer for banking. We now have a situation where the future shape of banking is beyond the control of Boards, individual regulators or countries alone."
"We are heading to a new place where universal banking doesn’t exist as it does today. Where retail and investment banking may be split and where the interests of countries, and their banks, come first."
1. The old universal banking model will no longer be sustainable
"When Lehman’s failed, the inadequacy of the insolvency regime was painfully exposed. It demonstrated that in the face of such a crisis, each nation protects its own interests."
"As the philosophy of ‘country-first’ takes hold, global banks will be forced to become less global. In this new world retail and investment banking are not comfortable bedfellows and will likely split."
2. Finance will become more localised and banks will exit major products and markets
"In a world where countries come first, many banks will retreat back to home markets. Finance will become localised and products will become simplified."
“This should mean great news for some customers as banks are forced to focus more on their needs. But it will also mean large universal banks must fundamentally restructure their business, which could include major divestments and exiting geographies or products.”
3. Customers will have access to fewer products that will cost more
"Retail banking is being dominated by ‘back-book reviews’ of mis-selling. While the goal of these reviews is noble, there is no end in sight. We now run the risk of harming the very people we aim to protect – our customers."
"Customers already have access to fewer pensions and investment products as a direct result. For SME customers – the lifeblood of the economy – access to funding at acceptable pricing is increasingly difficult."
"For large corporates it gets trickier. They will demand more global services and banks will have to become more global in their offerings. However, access to risk management products will become more expensive and the likely demise of a widespread OTC market means these products will be more costly."
4. Banking will become dull
"Banking will become dull, and dull will be the new good. Bankers will no longer be the rock stars of the commercial world and banking will become staid and adrenaline-free."
"As global banks reconfigure and become more country focused, stable returns will be demanded by investors. Volatile earnings will signal that a bank hasn’t finished adapting."
“The ‘dullness’ of banks will drive culture and behaviour, not the other way around.”
- ENDS -
Notes to editor
Copies of the full speech are available on request and Bill Michael is available throughout the day for interviews. For further information please contact
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This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.