Challenges and career opportunities in commercial banking

The commercial banking sector has lately been facing the most challenging environment and covid-19 has only intensified things for this $2.4 trillion industry. The key challenges to the sector include increasing operational costs leading to depressing revenue and profitability forecasts. The sector is facing greater credit risk and default rates. There is a growing demand for regulations and particularly credit regulations, and this is likely to put further pressure on the lending operation of banks. The economic contraction poses further challenges, as world GDP is not likely to go back to pre-crisis level at least until 2023-24. The banks are likely to lose up to $400 billion in their tier 1 capital in USA, UK and mainland Europe. Last but not the least, the growing interest of BigTech or Tech-Savvy firms like Facebook, Google, Amazon etc. in financial services industry is likely to intensify competition and make the drive for profitability even harder. If we look at the things at micro levels, we see increasing number of branch closures, job losses, overwhelmed call centers & digital channels, loan losses, historical low interest rates and necessary inconvenience to move online.
The challenges discussed above accompanied by the recent value chain disruptions are compelling commercial banks to reassess their banking business model.
What are likely to be the future trends in commercial banking? The necessary inconvenience to go online is likely to be a long term or perhaps permanent one. Banks worldwide and here in Qatar have invested heavily on their online presence, online operation and digitalization of bank services.Disruption and Digitalization is likely to be the currency of future. The USA has seen around 15% increase in online banking with over 70% banks offering end to end accounting opening via website and 45% via mobile apps. Qatar has also seen a surge in online banking & mobile appsusers, as well asgrowing digitalisation of bank services. It is important to note that Qatar has an expressed commitment to become a cash less economy.Banks are now partnering with FinTech companies to develop and implement integrated systems based on artificial intelligence (AI) and blockchain technology. Technology is also affecting payment systems, capital market operation, credit extension and deposit collection. The intelligent automation is likely to lessen the human workload in commercial banks in future. International cooperation and increased surveillance and security is another important area that requires systems to combat activities like AML and CTF. Technology will have a big say in this regard too.
So, what career opportunities are available in commercial banking? This can be divided into conventional roles (e.g. branch managers, relationship mangers, credit managers, bank tellers and customer services staff) and emerging roles (e.g. data analysts/data scientists , tech based regulatory compliance officer, experts in artificial intelligence (AI), blockchain technology,FinTech, digitalization (UX/CX) and alternate currencies, and financial actuary etc.). The conventional roles are likely to be shaped and reshaped around digitalisation. The commercial banking sector has always favored to recruit graduates who are analytical, inquisitive and focused. The graduates who are friendly, self-motivated and relationship oriented. The future bankers are likely to be (a) Empowered bankers: to grow revenues and customer satisfaction with vastly improved, digitally driven business insights; (b) Technophile bankers: bankers who have a very favorable view of technology and are open to embrace it in their daily work life, and (c) Intelligent bankers: bankers who understand the need of technology era and able to use AI, blockchain technologies and work with Fin-Tech companies to improve systems and procedures to provide seamless bank services. They are well versed in technology-based compliance.
There is a need more than ever before that university business schools and particularly banking and finance departments become ‘business facing’ and have a ‘revolving door’ relationship with the banking sector to produce graduates that meet the changing requirements of this important sector in terms of knowledge, skills and attributes.