Cooperative banks – strategy
For several years now, the financial sector has been undergoing a transformation which no financial institution – regardless of its specific corporate strategy – can sidestep.
What challenges do cooperative banks need to overcome today to remain relevant for customers in the long term?
The years before the interest rate turnaround were characterized by phases of growth in deposits and loans. Despite persistently low interest rates, most banks managed to maintain their revenue levels by adjusting their earnings mix. However, many banks are currently facing a structural upheaval due to a macroeconomic turnaround involving high inflation rates and a decline in economic growth. Their on-balance sheet customer business is under pressure. At the same time, deposit structures are changing, which often has a negative impact on the present value (provisions for contingent losses, BFA 3).
At the same time, remaining relevant for certain customer groups is becoming more and more of a challenge for banks. Declining “main bank loyalty” and increased price sensitivity are new hallmarks of customer behavior.
Many banks generate most of their total earnings with only a few business areas or core products. Securing these profit pools or developing new ones can be quite a challenge for banks, as they often have to compete for them with specialized fintech companies.
Mega trends such as digitalization, sustainability and the shortage of skilled workers have an additional impact on banks’ business models.
