Staying Ahead: Guiding Incumbent Financial Institutions towards Success

Financial Institutions have faced a turbulent first half of 2023 and are confronted with significant uncertainty in the future. The increase in interest rates have impacted the cost of financing and disrupted financial institution’s business models. Moreover, recent bank failures have damaged investor confidence. To add to their challenges, incumbents in the industry are under pressure from regulators and face disruptive competition from financial technology companies.

In order to navigate these transformation pressures and maintain their position, incumbent financial institutions must engage in careful and forward-looking planning. They should also consider strategic mergers and acquisitions (M&A) to strengthen their position. An example of the potential benefits of such M&A activities can be seen in UBS, which achieved record profits in the second quarter of 2023. These profits were largely attributed to the paper gains resulting from a significant transaction, amounting to USD 29 billion compared to USD 1 billion in the first quarter.

Furthermore, closer to home, as discussed in a recent S&P Global Market Intelligence article, transactions such as Mitsubishi UFJ Financial Group Inc.'s acquisition of Home Credit Philippines and Indonesia enable traditional financial institutions to enhance their portfolios with high-growth, technology-enabled offerings. This demonstrates the importance of incorporating innovative and technology-driven solutions into the offerings of traditional financial institutions in order to remain competitive and capture new market opportunities.

As a fintech and financial institutions (FI) banker, alongside the experienced FTI Consulting team, we possess the expertise and resources necessary to provide valuable assistance to established FIs in assessing their long-term business strategies. Moreover, we are adept at recognising opportunities for synergistic and high-growth potential acquisitions that can enable these institutions to maintain their competitive edge.

With our deep understanding of the fintech landscape and comprehensive knowledge of the banking industry, we are well-positioned to guide incumbents through the complex process of evaluating their business strategies. By leveraging our insights, incumbents can gain a clearer understanding of their current market position, identify areas for improvement, and develop strategic initiatives to drive long-term success.

The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.

FTI Consulting, Inc., including its subsidiaries and affiliates, is a consulting firm and is not a certified public accounting firm or a law firm.