Cocooning
The competitive environment is highly protected and consumer demand for products and services is largely homogenous. A weak economy at both the national and local levels, combined with a highly unstable geopolitical world, which includes acts of terrorism on domestic soil, make this a very dangerous world to live in. Although the playing field is made up of the "usual suspects," the basis of competition, business models, human resources and industry dynamics are different enough to pose challenges for many financial services companies.
Survival of Fittest
Radical deregulation and the arrival of many new entrants has created a hyper-competitive environment, yet this new competitive reality faces a consumer who remains largely focused on traditional choices, be it products, services or delivery channel. The financial services industry becomes ever more commoditized.
Taking Flight
Growing concerns about the impact of globalization result in an increasing anti-WTO stance among U.S. voters. This anti-free market position coincides with a greater emphasis on consumer protection in the wake of further corporate scandals and security/privacy concerns. The strong consumer position fuels demand for a more diverse offering of products and services tailored to the consumer. Yet moderate growth and regulatory restriction hamper the advance of new technologies in the financial services space.
Metamorphosis
In this scenario, the world is characterized by hyper-competition. This competitive environment, which is a result of stable geopolitical conditions, a booming economy, major breakthroughs in technology and a deregulated market space, dovetails with a robust demand from consumers for diversified products and services. This merging of two critical factors begins to shape elements of a "perfect storm" for the financial services industry. While it will not come to full fruition in the span of fives years, it will nevertheless dramatically alter the landscape as we know it.
