If you think the new year is a good time to take stock of the future, you'll want to read Robert Grosse's analysis of where the financial services industry is headed in the global and electronic economy.
The Future of Global Financial Services: Global Dimensions in Business reviews the underlying technological, regulatory, and global market shifts that are causing fundamental changes in banks, insurance companies, and brokerages. And what Grosse sees is not only a vast consolidation, but also a growing tendency for firms to provide all three services together in a form of company he calls "allfinanz." There are many problems to managing a three-culture allfinanz organization, ranging from "salary differences between banking and insurance, to management styles that are more conservative in commercial banking and insurance than in investment banking." Local market conditions could also affect how this model is implemented and whether it is viable.One potential casualty of these trends is the independent insurance company, says Grosse, a professor of international business at Thunderbird. The role of the insurance company could be diminished or even eliminated, as risk is handled in increasingly more sophisticated ways in financial markets.
And what role will technology play in the evolution of the industry? It's inevitable, Grosse says, that technology will continue to drive more consolidation and put more services online. But pragmatically, Grosse points out that it's unlikely all financial service businesses will go the way of the wire. We will likely always want human advice as we plan an investment strategy or seek ideas for raising capital.—Ann Cullen
Table of Contents
- Introduction
- The globalization of financial services
- The virtualization of financial services
- Government regulation: the second key factor underlying industry structure
- The financial landscape: organizations and allfinanz banking (the status quo)
- Competitive strategies of international financial institutions
- Competitiveness of banks from key countries (or, why are the U.S. banks ahead?)
- Responding to the challenge of the new economy
- Why insurance won't survive
- Investment banking at the crossroads
- Financial instruments and financial structures
- The generation of long-term investment to support bond and stock-market growth
- International financial centers
- Surviving the twenty-first century