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Banking M&A + M&A Strategies

Is M&A the Best Way Forward in the Recovering Banking Sector? Thought Leaders Discuss

Until 2018, the impact of the financial crisis of 2007-08 was visible in the US banking sector. Banking mergers and acquisitions had become limited, and the sector struggled to grow. However, in 2018 banking M&A witnessed recovery and prepared for substantial growth over the following years. In early 2020, this growth was suddenly interrupted by the advent of the COVID-19 pandemic.

As industries across the world attempt to recover from the aftermath of the COVID-19 pandemic, experts forecast growth for the recovering banking sectors across the world as well. Banking M&A has recently become crucial due to the increasing need for investment in technology and digital capabilities, and the various regulatory changes. Prior to the pandemic, consolidation had recovered to levels that were last seen before the financial crisis.

After the initial staggering impact of the pandemic, all industries have started preparing for recovery and are attempting to adapt to the new normal of the post-COVID era. Similarly, banks are on the path to recovery, and M&A is one of the most effective and crucial ways to recover successfully. Banking M&A is a challenging process and requires appropriate planning and unparalleled M&A strategies.

In this article, Infiniti Research experts discuss the impact of the COVID-19 pandemic on banking M&A. Additionally, as banks return to banking M&A with renewed motivation, it is important to be aware of the potential challenges, and the ideal way to approach this process and the difficulties encompassed. Therefore, this article details the significant upcoming challenges and the role of appropriate M&A strategies, as highlighted and discussed by Infiniti’s M&A support experts.

Attempting to recover from the aftermath of the COVID-19 pandemic through banking M&A? To learn how Infiniti’s M&A strategies can help you assess, identify, evaluate, and choose the ideal consolidations, request a FREE proposal.

Impact of COVID-19 on Banking M&A

With the rising number of cases in the United States and declining GDPs worldwide, all industries suffered substantial losses. Similarly, banking M&A saw a rapid decline in valuations and total shareholder returns. Additionally, boards and CXOs have shifted their focus to maintaining business continuity and stabilization of current businesses.

Further, the uncertainty of capital flexibility and losses, and the duration of the economic pressure has made M&A unappealing to buyers. In the instance of major distress due to factors such as capital pressure or material risk of failure, struggling organizations may need to sell. Apart from extreme measures, however, selling is not the ideal option in a struggling economy.

However, as banking M&A increases,  several trends are expected to surface. For instance, the rising need for fintech and digital capabilities, accompanied by the potential lack of funding for new fintech firms with limited market experience, may promote consolidation between traditional financial institutions and fintech firms. Additionally, the sudden upsurge in demand for digital platforms in every industry due to the pandemic will promote the need for banks and fintech companies to consolidate.

As these and other market trends begin to influence the recovering market, banking M&A is expected to recover within 2020 marginally. However, the COVID-19 pandemic will have a lasting impact on the foreseeable future of the banking sector.

Speak to our experts to know more about the impact of COVID-19 on your industry, the ideal path to recovery, and adapting to the new normal.

What companies need to prepare for during Banking M&A

As the banking sector starts on the path to recovery, the banking M&A process is set to face various challenges and opportunities. Although there will be a steady increase, the industry is expected to take a substantial amount of time before it has made a complete recovery. After a sudden impact like that of the COVID-19 pandemic, banks and fintech firms should be prepared for various factors in banking M&A to ensure successful transactions and avoid further losses.

Banking M&A + M&A Strategies

Therefore, Infiniti’s M&A strategy experts identified the following four crucial factors for banking M&A participants to prepare for:

Staying Ahead of Regulations

Changing political, social, and economic environments have previously posed substantial challenges for the financial and banking sectors. As 2020 proceeds, the political and economic scenario of the US continues to be precarious, and that directly impacts the regulatory environment of all industries. In the case of the banking sector, particularly, potential political regime changes can easily alter the future of all industry players and M&A transactions.

When strategizing for M&A transactions, participants need to prepare for possible regulatory changes and the impact of a new political regime on the economic environment. Additionally, choosing a partner that will be beneficial and supportive through changing factors is highly crucial and contributes significantly to a successful M&A. Therefore, key players have recently shifted their focus to acquiring professional assistance in developing M&A strategies. This helps ensure effective and successful strategizing and implementation of consolidations.

Accepting the New

The need for technological and digital capabilities has increased substantially over the last decade. Industries and consumers have become increasingly dependent on technology to carry out all major commercial transactions and activities. This has created the need for traditional financial institutions to consider and execute consolidations with financial-technology (fintech) firms. With increasing M&A transactions between traditional banks and fintech firms, the banking sector is headed on a path to digitization. However, although it is widely accepted that it is time for banks to shift from their legacy systems to modern fintech is necessary for survival and proliferation, many institutions struggle to make the change.

As the term legacy suggests, these systems are highly dated and a core part of the traditional banking systems and brand identities. However, they no longer fulfill the requirements of the modern consumer. Therefore, traditional financial institutions must prepare to consolidate with their agile fintech competitors and accept the new wave of technology. Adapting is crucial to survival, and changing to modern, adaptable, and consumer-centric systems is one of the essential changes for the banking sector.

Understanding Cultural Integration

During integrating, two independent organizations, boards, and CXOs often fail to account for the impact on their employees. This has led to a high failure rate in banking M&A in the best. Therefore, as companies work towards new M&A transactions, it is crucial to account for employee sentiment towards the consolidation process and ensure clear communication with all company employees. The right M&A strategy helps banks clearly communicate with and adequately train their employees for the new changes in the organization.

It is also important to ensure that employees on both sides of the deal agree with new policies regarding compensations, benefits, and organizational culture. Ensuring appropriate cultural integration can make or break an M&A. Proper cultural integration helps increase employee satisfaction and promotes efficiency and productivity. In some cases, organizations create an integration management office, with an integration CEO that helps manage every segment of the integration process, ensuring appropriate cultural and employee integration.

A Slow Path to Recovery

Although banking M&A is expected to recover through the remainder of the year, this process will be long-drawn and limited for a certain period. Currently, the scale is critical, and many struggling financial institutions and fintech firms will require M&A transactions to survive through the pandemic.

However, the economic impact of the pandemic has sent tremors through various segments of the banking and financial services sector, leading to an increased focus on short-term business continuity and reduced attention towards major investments such as M&A transactions. Therefore, companies must prepare for a slow and steady recovery and the possibility of limited options and partnerships. The right M&A strategies can help banks and fintech firms identify and execute the ideal M&A transactions even in a slow market.

Request more information and learn how Infiniti’s M&A strategies can transform the challenging banking M&A process into an attainable target for your organization.

How the Right M&A Strategies Can Help in Banking M&A

As financial institutions enter this phase of recovery, and banking M&A makes a long-awaited return, M&A strategies can be the major difference between successful and unprosperous consolidations. Infiniti’s experts help financial institutions overcome the challenges of banking M&A while maintaining business continuity and enabling a successful merger.

Three ways in which Infiniti’s M&A support and M&A strategies can help financial institutions in these challenging times are as follows:

  1. Organizations can create systematic and programmatic approaches to the process and enable the continuous development of potential M&A candidates.
  2. Boards, investors, and CXOs are offered data-driven insights and advice through the M&A process, with unparalleled guidance and research support.
  3. Financial institutions can assess all potential opportunities, identify the ideal partnerships for their organization, and make well-informed decisions about their future.

Recovering from the COVID-19 pandemic is expected to be a long-drawn and challenging process for all industries. However, with the right assistance and guidance from Infiniti’s M&A support experts, financial institutions can develop and execute successful M&A strategies that will boost the recovery process of their organization and the financial services industry.

banking sector

What Lies Ahead for Asia’s Banking Sector?

The way in which Asian customers are exploring and changing the way they consume banking services and use digital channels for their banking needs is rapidly transforming with each passing year. The openness and agility to understand and embrace these changes will reward banking sector companies. This will be the only way incumbent banks can survive in the Asian banking sector in the long run. This article entails a brief Q&A session wherein banking industry experts at Infiniti Research answer some key questions relating to the changing banking sector landscape in Asia.

Banking sectorOver the next decade, what are some of the most disruptive factors that could transform the Asian financial service sector?

Currently, the Asian banking sector is going through a period of turmoil. The environment in Asia’s banking sector is being largely influenced by geopolitical challenges, trade wars, and other political concerns. These could prove to be the three most disruptive factors concerning Asian banking companies and which can play a significant role in the banking decision taken by companies over the next decade. However, Asia being one of the biggest and the most lucrative markets for banking growth, companies in the sector must find new ways to adapt to these unfavorable conditions.

Struggling to stay relevant amidst the fast transformations in the banking industry? Request a free proposal to know how our market intelligence solutions can help you keep a close watch on the changing market trends and make strategic moves to adapt.

What can CEOs of banking sector companies in Asia do to cope with these disruptive forces?

CEOs of banking companies in Asia must ensure that they are up-to-date with the changing market conditions. This includes the need to keep the costs at bay. Despite the margin squeeze and the pressure on volumes, companies in the banking sector must aim to discipline their costs. It is also crucial for them to strategically manage risks. This involves not only the creative risks that they take on board but, also the conduct risks. Banks also need to be aware of the increasing scrutiny that is being placed on dealing with customers. Finally, it is also necessary for CEOs must effectively manage their balance sheet and capital.

What are some of the best ways for banking companies to stay relevant in the digitally-inclined market?

In the current fast-changing banking sector, where there is an increased focus on the digital landscape, incumbent banks will need to scale up their capabilities in four critical areas. This includes digital marketing to enhance customer acquisition and engagement, value-generation through digitally active consumers, leveraging customer data efficiently to provide a differentiated proposition, and embedding banking in customers’ daily lives for seamless banking transactions.

A deeper understanding of the changing trends in the banking sector is critical for companies to adapt and provide a frictionless experience to customers. Do you find gaps in your business in effectively meeting these needs? Get in touch with a banking sector expert from Infiniti Research and tell us more about your challenge.

Banking sector

Reducing Annual Operating Cost by $7 Million for a Banking Sector Client through Market Intelligence Engagement

Banking Sector Overview

The global banking sector is expected to witness positive growth over the coming years as major developed markets are experiencing increasing commercial banking activity as a result of strong economic performance and positive expectations. Despite this stable growth, the evolving customer expectations, lower return on investments, rising competition from FinTech providers, and regulatory pressures are increasing challenges for companies operating in the banking sector. As such, companies in the banking sector will need to revamp their traditional banking models in order to keep up with the fast pace of changes in the industry.

Recent studies show that around 70% of companies in the banking sector have adapted a customer-centric business model. So, have you revamped your traditional banking model to meet the need of your customer segments? If not, our market intelligence experts can help. Request a FREE proposal.

Business Challenge

The client is a banking company based out of North America.

Increasing competition from FinTech companies made it difficult for the client to adjust quickly to the changes, not just in technology but also in operations and other facets of the industry. Also, owing to the evolving regulatory requirements, the banking sector client had to spend a large part of their discretionary budget on being compliant and on building systems and processes to keep up with the escalating requirements. In addition, due to the client’s inability to keep pace with the latest technologies and trends, they faced difficulties in delivering the level of services that consumers demanded, especially with regard to technology. As such, they wanted to thoroughly analyze the US market changes, competitors’ strategies, and industry developments to revamp their business models accordingly. To do so, they approached the experts at Infiniti Research to leverage their expertise in offering market intelligence solution.

Other major challenges that the banking sector client wanted to tackle by leveraging Infiniti’s market intelligence engagement were:

  • Changing landscape for lending and payments mechanisms
  • Regulatory compliance hurdles
  • Falling net interest margins

Traditional, time-intensive market research cannot help you to keep up with the needs and demands of a more demanding, smarter world. Contact us to know how our custom market intelligence solutions can help you gather data-driven insights into a new or existing market.

Our Approach

The experts at Infiniti Research followed a four-phased approach that involved:

Market research study to analyze the current market landscape and identify the right scale of opportunities.

Customer intelligence study to analyze customers’ changing needs and demands. This phase of the engagement also involved analyzing reasons for customer churn.

Market scanning and monitoring to assess and predict changes in emerging regulations in the US banking sector.

Competitive intelligence engagement to compare the client’s offerings with that of the top companies in the US banking industry.

Results Obtained

The insights obtained from Infiniti’s market intelligence engagement helped the banking sector client to assess local competition, evaluate the right scale of opportunities, understand the impact of emerging regulations, and analyze the changing landscape for lending and payments mechanisms.

By understanding customers’ needs and demands, they were able to adopt a customer-centric business model. This helped the banking sector client in delivering the level of service that consumers demanded. Identification of security and operational threats in advance helped them to build a more advanced information security system. This subsequently helped them to enhance customer experience and acquire new customers.

By identifying the cost-effective technologies in the US banking sector, the experts helped the client to reduce manual processing through automation of critical tasks. These improvements enabled the banking sector client to boost customer satisfaction and retention, while at the same time reduce annual operating costs by $7 million.

To sustain a leading edge in today’s competitive marketplace, companies in the banking sector will need to keep pace with the market changes and differentiate their service offerings. Request for more info to know more about our services for companies in the banking sector.

Investment banking industry

An Overview of the Top Investment Banking Industry Challenges

The investment banking industry is on a new wave of change and transformation. As the financial services sector is still recovering from the global economic crisis, investment banking companies in the US are still struggling to regain their former levels of profitability. As a result, several major players in the US investment banking industry have announced their plans to move from traditional underwriting business to other activities including mergers, acquisitions advisory, and fundraising. This change has been largely fueled by recent regulatory changes that have made some investment banking activities more expensive than the others. Furthermore, the rising need for sophisticated in-house applications, innovative customer-facing portals, and higher transparency and security across the board mean that companies in the investment banking industry are faced with substantial pressure on all fronts. This blog covers some of the major challenges facing companies in the investment banking industry right now.

We help our investment banking industry clients to deal with changing operating model structures, business and finance transformations, and evolving customer expectations that redefine business operations. Request a free proposal for more insights.

Investment banking industry challenges

Investment banking industryRoadblocks in cost reduction efforts

Companies in the investment banking industry have been constantly pursuing strategies to achieve sustainable cost efficiency. However, several factors including declining revenues, excessive costs, and developments in digital and regulatory pressure have increased challenges for investment banking companies in the US, making it incredibly difficult to achieve cost reductions. Leaders in the investment banking industry who are seeking sustainable cost reductions should strive to strike a balance between optimizing the existing core activities while investing in new engagements.

Enhancing client experience

Customer-centric experiences in B2C business models are shaping client expectations in the B2B realm as well. As a result, investment banking industry companies are finding it difficult to meet these changing client demands and expectations. Investment banking companies can begin by assessing the existing client experience and mapping out the client experience standards that they want to deliver to identify necessary changes that could be made to their delivery channels and feedback and monitoring mechanisms.

Reimagine how your business profits are generated and transform your client experience with our advanced solutions. Get in touch with our experts to know more about our solutions.

Cybersecurity

Cyber-threats are rising at an unprecedented rate and legacy technology have become a risk factor. They are more prone to unpatched vulnerabilities and create compatibility issues in M&A situations. Furthermore, there were several mergers and acquisitions in the recent times as banks sought to consolidate their protection under the law. But often the legacy infrastructure acquired by a bank through M&A activity is not up-to-date and features extensive vulnerabilities that create additional fire-fighting challenges for IT teams of companies in the investment banking industry.

Talent acquisition

Companies in the investment banking industry are still struggling to retain top talent despite introducing new measures such as faster promotions in a bid to attract employees. One of the prime reasons for this is that young professionals are finding themselves more drawn to alternative sectors such as technology or innovative start-ups. Moreover, the fact that the lifestyle of an investment banker is typically associated with long hours and tight deadlines is also part of this permanent trend. Investment banking companies must identify effective ways to attract and retain talent in their organization.

Learn how we help companies in the investment banking industry to drive disruption.

US banking industry

‘Why’ and ‘How’ of Improving Customer Experience in Banking

Why do banks need to focus on customer experience?

The banking sector has been slow in keeping pace with the digital revolution and it is high time that they catch up. Although technological advancements such as ATMs and internet banking have been incorporated into nearly every banking company, these facilities don’t give much emphasis on improving the customer experience in banking. Banking is currently among the least popular consumer businesses. In order to change this, financial services companies need to be more open to modernizing processes and bring customers also to the forefront rather than only emphasizing on increasing profits. When compared to most of the other sectors, the banking sector has an abundant source of customer data why can be used to create an exceptional customer experience in banking. However, majority of banking companies fail to efficiently utilize this data. If used correctly, customer data available can be used to enhance the customer experience in banking and promoting a customer-oriented culture in banking companies.

Many leading banks are pouring tremendous resources into transforming their customer experience, often with mixed results. Request a free proposal to know how our solutions can help avoid this situation and create strategies for a positive customer experience in banking companies.

How to improve customer experience in banking

customer experience in bankingBanks often struggle to pursue customer-experience transformation amid the complexities of running their day-to-day business. But with the right strategies in place, they can quickly identify customer pain points and ensure better customer experience in banking. Based on our expertise in solving several banking sector challenges, here are some ways that can be used to encourage and establish better customer experience in banking sector companies.

Create cross-functional teams with C-Suite backing

Transforming customer experience in banking requires the involvement of stakeholders from different teams including product, distribution, pricing, risk, and legal. Leaders in customer experience pursue several approaches to overcome this kind of complexity. Setting up a dedicated customer-experience organization within the bank is an option that can be considered. Dedicated teams can be assigned to encourage a continuous focus on customer experience in banking across product, service, and geographical silos. CEOs of banking companies must make customer experience a priority, and in some cases the appointment of a chief customer officer can serve to underline that commitment.

As banks around the globe rush to transform their customer experience, it’s easy to trip up. Get in touch with our experts to know how we can help execute a step change that moves ahead of your competitors in the market.

Monitor end-to-end customer journeys

Mapping customer journeys can help companies in the banking sector to identify all touchpoints across all channels where they engage with customers. Start by identifying the different types of customers that the bank deals with. Next, outline the journey for how each customer type engages with the bank. Begin the customer journey map with the first point of contact that the customer has with the bank. Continue with each next step and all potential steps until the journey is complete. Lastly, identify the at-risk customers and proactively engage on a personal level to improve, and hopefully, salvage the relationship.

Continuously emphasize on creating value

Enhancing customer journeys and customer experience in banking is not a linear process. Often the first round of initiatives may not deliver the desired customer satisfaction levels. Moving from good improvement to great will require regularly going back and maintaining patience and a mind-set of always pushing for more in the interest of customers. This continuous-improvement regimen can help foster a superior customer experience in banking companies.

Learn more about Infiniti’s solutions for banking companies

Banking industry trends

Top Banking Industry Trends Dominating the European Market

Banking companies across Europe are gradually moving from traditional banking techniques to digital banking in order to enhance customer experience and stay competitive in the market. Although European banks are facing the heat from increasing political volatility, new regulations, and persistent questions about the technological transformation of banking, the sector is expected to mark a positive growth in the next few years. Experts at Infiniti have identified some of the most attractive banking industry trends that will dominate the agenda of European banking executives and will transform the industry in the years to come.

Bankers across Europe believe that technology and process innovation will transform the retail-banking landscape in the next three to five years. Are you prepared for this change? RFP to know how our banking industry analysis can help you stay updated with the opportunities and challenges in the market and formulate effective strategies to stay competitive in the market.

European banking industry trends

banking industry trendsDigitalization of corporate banking

As the continued dissatisfaction of national and multinational companies relating to service dissatisfaction becomes impossible to ignore, corporate banks are finally making the leap to go digital. The back-office operations such as cash management have already been digitalized and are expected to extend through middle office (which involves the creation of new banking products) and front office (relationship managers will get hands-on experience in using digital tools) operations this year.

Growth of Fintech and RegTech

Last year, Fintech and RegTech spending continued to proliferate in EMEA’S emerging markets. With new firms entering the competitive environment, such banking industry trends will continue to persist. Banking industry trends such as increasing spending on FinTech and RegTech is intrinsically linked with improving levels of financial inclusiveness.

For more insights on how to better understand banking industry trends and threats, as well as how European banks should respond to them, get in touch with our experts!

Open banking standards

Banking industry trends like open banking has taken the more advanced economies of EMEA by storm. In open banking retail/corporate customers are in control of sharing their financial assets and personal data with third-party providers of their choice. To enable this, banks open-up and share their infrastructure (including data and functionality) and documentation (code) with third parties, usually through Application Programming Interfaces (APIs). An open banking standard prescribes the steps which banking sector companies must take. In Europe, several top banking corporations are making a collaborative effort to create an open API standard.

Technological innovations to promote financial inclusion

One of the most prominent banking industry trends this year will be to connect and reconnect customers to the financial system. While advancements have been made to bridge the gap between people having access to banking services and those who do not, progress needs to move at a faster pace. This requires the collaborative efforts of national governments, financial service providers, telcos, and other technology vendors.

Acceleration of platformification

Bundling together multiple services into one online platform is known as platformification. Banking industry trends such as platformification is aimed at providing an efficient, automated, and integrated customer experience. This consequently drives improved financial and operational performance.

Know more about Infiniti’s market intelligence solutions for the banking industry

product research

How Banking Companies Can Keep Themselves Unscathed from Cyber Attacks

Cyberattacks are becoming more frequent than ever before. Despite increasing emphasis given to cybersecurity in banking companies, this sector is one of the most sought-after targets for cybercriminals. Robbing a bank is one of the oldest crimes in the book. However, bank robbers in the modern day are hiding behind the screen, using targeted and sophisticated cybercrime tactics and leaving IT teams struggling to keep their networks and their vaults secure. According to the Verizon Data Breach Investigations Report (DBIR) 2016, the financial sector had the largest number of security breach incidents, with 795 confirmed data losses. In fact, the U.S. Securities and Exchange Commission (SEC) has stated that cybersecurity in banking the biggest risk facing the financial system.

When it comes to cybersecurity in banking, it is always beneficial to be proactive rather than reactive. Though cyberattacks cannot be fully prevented, planning how to respond to a breach and regularly testing this plan through realistic simulations will helps organizations reduce the severity of such malpractices. In this blog, the experts of cybersecurity in banking and financial sector from Infiniti Research have put forward some of the key ways in which companies in this sector can secure themselves amidst the cyber-attack chaos.

Ways to ensure cybersecurity in banking 

Though the IT teams in banking companies have increased protection of customer data and brought down the number of credit card fraud, this does not completely establish cybersecurity in banking. The internal systems of most banks still need securing. Here are some ways in which the teams for IT and cybersecurity in banking can improve their network security to better secure the vault:Get More Info

Be proactive

Banking sector companies must respond as if their network already has been breached rather than waiting for it to happen. Adopting this mindset forces the IT teams to prioritize the most business-critical parts of the network and use network segmentation as a strategy. If done in the desired manner, network segmentation, achieved through the creation of network zones, limits the ability for a hacker to move laterally across a compromised network.  Cybersecurity in banking through network segmentation requires continual updates and configurations.

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Enterprise-wide security policy

Having a well-defined security policy is a crucial roadmap towards cybersecurity in banking. This helps the IT team maintain a truly adaptive security architecture and determine the best way for the network to operate with minimal risk. Furthermore, it must be noted that the security policy takes into consideration all the regulatory and enterprise compliance requirements and how to apply timely patches to maintain compliance.

Security policy enforcement

As important as it is to have a security policy to ensure cybersecurity in banking, it is also imperative to validate that it is being enforced across your network. Not doing so will make the network vulnerable to threats. Organizations in the banking sector must constantly monitor their network for changes to configurations and ensure that these changes are approved and compliant with policy. This is a collaborative effort across the enterprise—network operations, security operations, and the CIO. 


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