What will be the key issues facing the financial services industry in 2007? The Global Future Forum, a futurist think-tank comprising academics, analysts and industry practitioners, outlines the most likely scenarios.
The financial services business will undergo considerable consolidation and homogenisation over the next 5-7 years. The industry will shrink to a few dominant national and global financial supermarkets, with the number of community banks, building societies and credit unions reduced by over half.
During this time, banking, brokerage and insurance will fuse into a single business in which the full range of financial services will be offered through a single provider.
While some ‘niche’ companies may evolve, most experts do not anticipate the industry to break apart into individual businesses that specialise in a particular product line like mortgages, retirement accounts or auto insurance.
While the traditional financial services industry consolidates, a host of new competitors are expected to emerge. Mass-market consumers will increasingly embrace the idea of buying their financial services from non-traditional suppliers such as supermarkets and car dealers.
The changing composition of financial services suppliers will be likely to be coupled with a significant shift in market demographics and demand. As a major proportion of the population ages, for example, there will be big shifts of consumer expenditures toward insurance, pensions, and other income-generating financial services.
This aging population will be looking for simplicity, control and established trust bonds with financial services providers they can rely on.
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