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Digital related investment opportunities in Banks (retail and global)
For roughly one year, the relative performance of global players in the financial markets has been flat. Now, a cautiously positive view on banks is warranted, yet future performance will not be driven by the broad application of new technologies e.g. the implementation of large digital applications, which would thereby improve operating efficiencies, but rather by improved credit quality, especially in the peripheral markets of the European Union. It’s expected that banks will only deploy highly digitalized strategies after 2018.
In general, banks closely follow economic stewardship and since a substantial improvement in the macroeconomic environment can be expected, low quality assets have more upside potential than high quality assets. From a risk classification point of view, banks are presently regarded as low quality assets by the market.
For retail and global banks, the digital opportunity is vast as it ranges from the application and implementation of granting overdraft facilities, handling mortgage and credit card applications, as well as asset allocation tools. Less complex operations such as local and international payments (in and out) as well as cash transactions are already largely developed and on offer.
Knowledge is power.