The State of the Financial Services Industry 2012

The Real Financial Crisis: Why Financial Intermediation is Failing
February 8, 2012
Industry Trends
Global, Asia-Pacific, EMEA, Latin America, North America

Abstract

REPORT PREVIOUSLY PUBLISHED BY OLIVER WYMAN

Oliver Wyman has launched our 15th annual State of the Financial Services Industry report, The Real Financial Crisis: Why Financial Intermediation is Failing. The report examines what can be seen as a failure of the financial system’s intermediation of borrowers and savers: its causes, impacts and implications for financial institutions, including banks, insurers, pension funds, investors and policy makers.

The report identifies the problem that there is and will be a growing shortage of long-term capital available to the real economy and shows that, if we look simply at the needs of savers and borrowers, this should not be the case. Government and corporate demand for long-term financing is almost matched by households’ need to save for retirement. However, households commit far less to long-term savings products than they could due to unattractive offers, liquidity preferences, a relatively low level of trust in financial providers and higher tax rates on savings compared to real estate and consumption.

The report also provides some recommendations for regulators and financial institutions to help mitigate the effects of this global situation. 

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America (Boston)
Tylor Tourville
ttourville@celent.com
Tel.: +1 617 424 3284

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)208 870 7875

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81.3.3500.3023

Table of Contents

1. INTRODUCTION

2

2. A HAPPY COINCIDENCE OF NEEDS

4

3. CAUSES OF FAILURE

9

 

3.1 Reluctant savers

9

 

3.2 Fragmented financial services industry

17

 

3.3 Constrained intermediaries

19

4. IS THERE A SOLUTION?

21

 

4.1 Financial institutions

21

 

4.2 Savings products

23

 

4.3 Regulation

23

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