Question

The banking industry has converged in the past 50 years. What does convergence mean in the context of the banking industry?

Answer 1

Banks are pursuing new strategies for sustainable growth in the industry. Banks have been through emerging challenges and opportunities to effectively balance their long-term goals with short-term performance pressures to be amply rewarded. To achieve the long term objectives and sustain in the competitive financial market, the sector has laid down certain standards which has aligned the Banking Industry towards some of the Macroeconomic aspects for long term growth.

The metamorphosis or the evolution of the current Banking Industry has been achieved as a result of adapting to the multiple challenges like complex and diverging regulations, legacy systems, disruptive models and technologies, new competitors and restive customer base with ever-higher expectations. The alignment towards the macroeconomic aspects (including; Customer centricity, Regulatory recaliberation, Technology management, Mitigating cyber risk, Fintechs and big techs and Re-imagining the workforce) has been the utmost driver of the industry to bring the institutions on common platform.

Segregation of the overall business into five major sectors including Retail Banking, Corporate Banking, Capital Markets, Asset Management, Wealth Management and Payments has also been a major factor in converging the Banking Industry to few functions adopted by majority.