As consumers become more aware of the financial product characteristics and the choices of financial providers, they will be in a better position to demand for a broader range for products and services customized to their requirements, at more competitive prices and through more convenient channels. This will contribute to the development of the financial sector as it will prompt increased innovation in response to these demands. Indeed, product life cycles can be expected to shorten in the retail financial services. For example, checking accounts are being fast being replaced by cash management accounts. Well informed and discerning consumers are a powerful force in shaping and driving the market. Banking institutions will thus have to continually innovate in order to meet consumers' preferences and expectations. Consumers' demand will thus be able to drive business competitiveness, spur greater innovation and challenge banking institutions to strengthen their competitive advantage. Educated consumers are without doubt, a powerful force to drive performance improvements in banking institutions to attain the desired efficiency and effectiveness in a market driven environment. Financially savvy consumers will demand greater clarity and transparency in the way banking products and services are provided to customers. Communication policies by banking institutions therefore needs to ensure clear and effective communication of key information to customers, especially with regard to the more complex products. Indeed, increasingly knowledgeable customers would not only allow for good financial decisions, but there would also be pressure for banking personnel to not only enhance their own knowledge but also their customer service orientation.

Financial service providers have long competed on their ability to provide products and services tailored to each customer’s needs and profile. Traditionally, a bank’s balance sheet and earnings offered insight into the quality and results of its transactions with customers, but those historical measures reflect only the outcome of past decisions. A bank’s ability to thrive in the future – and the ability of the banking sector to act as a source of credit to businesses and consumers alike – depends instead more on the kinds and levels of risk that its transactions entail. For most of the history of banking, banks could assess those risks only in a highly subjective manner and without significant confidence in the quality of such assessments. However, financial innovation and advances in the measurement and management of risk have fundamentally changed how banks and other financial service providers approach their businesses. Three trends are particularly prominent and have been analysed by the Joint Forum. First, one of the most notable advances in risk management is the growing emphasis on developing a firm-wide assessment of risk. Firm-wide risk assessment Improvements in technology and telecommunications have made it easier for firms to gather, collect and analyse large amounts of data on their exposures and business activities efficiently and increasingly in near “real time.” To make the best use of firm-wide data, many organisations have established a dedicated risk management function to foster more highly integrated and systematic approaches to risk measurement and management.