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The future of commercial banking

GradAustralia

Still deciding which industry to start your career in? Take a closer look at commercial banking – here are 3 changes that are shaping the future of banking.

Already know exactly what you want to do after finishing uni? Great – many uni students do! But if you’re still undecided or want to know more about your options first, then it’s useful to think about where your potential industry is heading and what that could mean for your future career opportunities. Not only that, but it’s important to weigh-up the specific job prospects of commercial banking and what a typical graduate program might look like for you.

So, where is commercial banking heading and does this direction make it the right choice for you? Only you can answer that question but to help in the decision-making process, there are a few clear trends that will likely change the way commercial banking is done in future.

Industry changes in commercial banking

Like a lot of established traditional industries, the banking sector is facing a lot of change. The banks in Australia have to contend with a whole raft of considerations in setting their long-term strategies. This includes changing customer behaviours, digital disruption, regulatory and political scrutiny, security threats and new competitors.

While change is often viewed as a bad thing, it’s important to see the potential opportunity that it presents to capitalise on new markets, beat competitors to customer trends and reshape ways of doing business. What could each of these changes mean for the future of banking but also for your potential career path?

  • Changing customer preferences: New banking customers are digital natives and have not grown up in a culture where regularly going to bank branches is the norm. While some older generations of customers still attend a branch, the trend is declining among this cohort too. Banks face a ‘demographic cliff’ once younger generations become the largest proportion of banking customers. They need to change their customer service models to cater to a digitally savvy audience with new expectations of bank accessibility, interaction and service. A long-term career in commercial banking will have to keep this trend at the heart of all decision-making, with the opportunity to reshape how banks interact and connect with their clients.
  • Digital disruption: ‘Disruption’ is one of those buzzwords you probably hear businesses talk about all the time – particularly when discussing technology. While its use can often become broad and meaningless, it’s a buzzword for a reason! The banking industry (particularly in Australia) is ripe for new competitors to challenge existing problems (or ‘pain points’) with current banks. ‘Fintech’ startups in Australia and worldwide are trying to capture a piece of the sizeable banking pie by using technology to provide customers with lower prices, more convenience, greater transparency and increased access to banking services. It’s an interesting time to be involved in this space in banking. While it’s early days in this potential revolution, a lot of the big banks have begun investing heavily in innovation and R&D, and even partnering with some of these new startups to work together. A career in commercial banking (particularly strategy roles) will need to constantly think-through how this scenario will play out and how banks should respond – to prevent them from going the same way as Kodak or Nokia!
  • Regulatory scrutiny: Political pressure and public scandals have increasingly been plaguing the big banks in Australia. Scandals in recent years have spanned everything from interest rate rigging, inappropriate financial advice, exploitation of customers and money-laundering breaches. It’s no wonder the CEO of Australia’s largest bank had to step down in 2017! With the public clearly fed up with all these scandals, and politicians increasingly pushing for the banks to clean up their act (including a Royal Commission into banking), the industry has a real impetus to take accountability and respond. It’s likely that a role in commercial banking will need to be very conscious of these developments over the medium term, especially when combined with the changes happening with customer behaviours and digital disruption.

These points are just a sample of some of the biggest trends impacting the future of banking. All combined, they make for a lot of potential change in one industry. Depending on what you prefer, this can make a future career in commercial banking exciting or daunting (or maybe a bit of both). It’s up to you to decide!

While you’re mulling over how this brave new banking future fits with your career objectives, let’s talk about what commercial banking can offer you in terms of graduate programs.