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Adapting to Ultra-Low Interest Rates – Thematic Research

Since 2007 and the global financial crisis, many of the world’s most developed economies have been dealing with ultra-low interest rates as policy makers and politicians attempt to stimulate demand. Over a decade on, with a poor economic recovery, the COVID-19 crisis has once again caused base rates to be cut, though little room to do so exists given how close they are to zero already. As a result, many economies have found themselves implementing zero-percent rates or even negative interest rates, attempting to further incentivize spending and stop customers saving.

Mohammed Hasan, Banking Analyst at GlobalData, comments:

“What we are seeing from the most innovative banks around the world is intent to become more like technology companies whereby they offer platforms and marketplaces to their retail and business customers, make better use of data and technology to offer superior levels of service and security; all of which enables them to generate new streams of revenue that are not dependent on interest rates, that often also augments existing streams of revenue by encouraging use of traditional banking products and services.”

Scope

The most innovative names in retail banking are becoming platforms and integrating non-banking services into their offerings. This serves as a new stream of revenue for them and places their banking and financial services offerings front and center to capture more of the primary account and spending relationship with customers.

Banks that are primed to succeed over the next five years in the face of compressed net interest margins are those that have lowered their cost-to-income ratio and decreased the proportion of revenue reliant on net interest income. This represents banks that have streamlined their business models and reached the necessary efficiencies to remain profitable as rates remain low.

Reasons to buy

Gain an understanding of the banks that are most likely to succeed in the ultra-low interest rate environment and the strategies they have taken and launched to gain an advantage.

Discover how banking is changing and understand that the largest banks are becoming more like technology companies and conglomerates.

Understand how macroeconomic forces are driving strategy and technological change that will make it easier for large companies to move into new sectors.

Companies mentioned

BBVA, DBS, Sberbank, ING, Bank of America, BNP Paribas, Lloyds, TD Bank, CBA, RBC, RBS, Barclays, HSBC, Deutsche Bank, Société Générale, Capital One, US Bank, Crédit Agricole, OCBC, UOB, Mizuho Bank, Resona Bank, Juroku Bank, Okazaki Shinkin Bank

Table of Contents

Table of Contents

Executive summary

Trends

Industry analysis

Value chain

Players

Companies

Competitor rank

Glossary

Further reading

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