Rising competitive and regulatory pressures are prompting banks to integrate silos to facilitate enterprise risk management (ERM). Banks initially will focus improvements in the most problematic silos, but they'll do so in the context of a larger ERM plan. Key challenges will be data and organizational issues.
Rising regulatory pressure also will lead banks to invest in credit risk management processes and technology. Small banks will focus on reducing the subjectivity in credit decisions; large banks will focus on improving portfolio-management processes and technology to provide greater transparency.
Faced with product commoditization, increasing competition and decreasing customer loyalty, banks are being forced to seek new ways to boost revenue and increase customer retention. Relationship pricing and product bundling based on customer behavior, profitability and a mutual economic incentive are key drivers to sustainable growth.