Why Banks Still Matter
Banks — whether government controlled or privately held, whether specialist, regional, or universal players — are still the heart of the global economy. They pump the funds on which productive human enterprise depends. Banks must perform this role well, with all the diligence we would expect of any expert or custodian of an essential task.
Banking organizations must refocus on those fundamentals that are unchanged by the financial crisis — their core purpose, customer needs, and capabilities — while recognizing that profound market changes have occurred and will affect how these capabilities need to be delivered. Those leaders whose banks can respond to the times and enhance their capabilities will be tomorrow’s winners.
As customers of banks, we must recognize that this sort of trust and long-term relationship is in our best interest. It will allow us to share information and make better decisions, and it will also give us greater access to scarce credit liquidity.
As investors in banks and bank securities, we may have to accept lower returns as a trade-off for greater transparency, greater security, and a form of economic growth that reliably, if more slowly, does a better job of lifting all boats.
As citizens, and as the regulators of banks, we need to make sure that the core purpose of the financial-services industry is fulfilled. The capital security of individual institutions must be guaranteed, and the risks of the overall system must be managed. We must continue to encourage innovation, best practices, access to global capital, and the best talent. Banks need all these elements to function, and functioning banks are indeed critical to the recovery and prosperity of our nations.
Reprint No. 09405
- Vanessa Wallace is a Booz & Company partner and leads the firm’s financial-services practice in Asia, Australia, and New Zealand. She specializes in strategy, postmerger integration, and restructuring in retail banking, wealth management, insurance, and the public sector.
- Andrew Herrick is a senior associate with Booz & Company based in Sydney. His expertise is in retail and business banking, with a focus on strategy, organizational transformation, and operational excellence.