Possible directions of bank strategies

Abstract

THE AIMS OF THE PAPER

After the economic recession of 2008, there have been many significant changes in the global and Hungarian banking market. In the dimension of profitability the previous incomes of lending and financing has altered, while in expenses the emphasis slid into operational efficiency. The banks must follow these recent trends and changed circumstances of the market. Past business models are not going to last because of the fintech revolution, new competitors, various consumer preferences and the tightening regulations so new and reasonable directions are needed in strategy-making.

METHODOLOGY

The study is a theoretical summary, which is using theories from the bibliography of strategy-making and operational efficiency with practical approach.

MOST IMPORTANT RESULTS

Although the global banking market shows significant particularities among geographical units, thanks to digital transformation it is worth finding world-wide best practices even for Western-European or for Hungarian banks. The most successful banks build up their strategies based on one of their key competences, which provides permanent economic dominance for them. On the other hand, compared to the period before the recession, operational efficiency should not be ignored.

RECOMMENDATIONS

The study shows possible alternatives for creating the most suitable key competences and raising operational efficiency through a new Chinese bank. It presents that horizontal expansion can be a real strategic advantage in banking market as well and it shows that increasing operational efficiency can provide permanent dominance. Moreover the study confirms that key competences and operational efficiency can firmly grasp each other and they do not separate at all. It also enlightens the increased role of operational efficiency and supporting processes and it presents a possible strategic direction. In this theoretical summary the empirical examination of the topic is not considered, although this field of study provides further analysis.