It's back to the strategy drawing board for banks

FOR many years, corporate strategy languished in banking circles. During the go-go 1990s and most of the 2000s, too many bankers pursued indiscriminate growth, had a broad appetite for risk and diversified their portfolios without worrying enough about controlling costs or staking out distinctive positions in the eyes of customers.

Then, the financial crisis caused an abrupt about-face from growth to survival. Many bankers wielded blunt restructuring tools to take out costs and de-leverage their balance sheets in order to meet regulators' capital adequacy requirements. While most of these measures were necessary, they certainly did not set the stage for future growth.

The times demand that banks re-learn strategy. Banks' sources of revenue have come under pressure as credit growth has slowed and net interest margins have been squeezed. Digitally based entrants with disruptive business models, such as eToro and Kabbage, have been attacking lazy profit pools and taking share from incumbent banks. And repeated waves of regulations have introduced ever stricter and higher capital requirements.