Executives from leading financial institutions and think tanks joined policy makers, academics, and management consultants at the Brussels campus of Vlerick Business School for three spirited panel discussions on financial-services regulations in the European Union. Held under Chatham House Rule, this paper does not offer specific attribution on points raised, but draws selectively on the many valuable contributions.

The gist of the debate is that scale and regulatory costs have increased dramatically in the European Union, and that while governments want to tighten control over the financial sector in general, financial institutions as a whole and banks in particular warn that more regulation threatens to become counterproductive, eroding their ability to lend and thus undermining the prospects of new investment and growth.

Everyone seems to agree that strict regulations are both required and desirable, but they must be appropriate, adaptive, sufficient, and transparent. There is widespread doubt that current regulations embrace these qualities. Indeed, regulations really aren't all that appropriate, given the excess focus on retail banking and less on other financial industry segments, such as shadow banking. They may be adaptive, but in the wrong way, as pre-crisis regulations slowly enabled global integration, but post-crisis national tightening has led to fragmented, inward-looking and contradictory policy. Sufficiency is difficult to define, but the current approach may lead to overkill. Lastly, transparency—less since the involvement of various regulators in a single financial institution—leads to contradictory effects. Overall, the equilibrium between free market and regulation remains elusive—and the continuing crisis may affect it even more.

In developed markets, online banking has been growing by an average of 10 percent per year over the past decade. By contrast, only a third of all GCC bank customers have signed up for online services, and only half of those are active online. A.T. Kearney conducted a study across all six GCC countries to gain a deeper understanding of online banking in the GCC, its future trends and expectations, and the potential areas of improvement. The findings confirm that the online channel will most likely become increasingly relevant, but there is a need for GCC banks to address the online opportunity in a more structured way, by defining a clear strategy and addressing the implications for the banks’ operating models.

This paper takes a closer look at the study findings, the online opportunities available to GCC banks, the expected benefits for key stakeholders, and the ways in which banks can position their offerings to take full advantage of online banking.

The aftereffects of the financial crisis and a continued recessionary climate in Europe have forced many banks to squeeze costs to preserve or restore profitability. Payment leaders are scratching for investment money in general, and at a time when the rapid evolution of e-commerce and mobile payments is forcing banks to invest large sums, the impending deadline to implement the Single Euro Payments Area (SEPA) merely adds to the already-lengthy list of contenders for scarce resources.

Whatever the implications, SEPA is unavoidable. With this in mind we see five fundamental questions banks must answer as they seek to comply while building for long-term success:

• Are your customers ready for SEPA?
• Are your SEPA solutions strong enough?
• Are you capturing the opportunities in this transition?
• Are you ready for further regulation-driven change?
• Are you competitive in payments for the long term?

In this paper, we answer these questions as the European payments industry reaches the precipice of major change.

Profitability in the Gulf Cooperation Council (GCC) insurance market began declining five years ago, dropping from 28 percent in 2007 to 9 percent in 2011, despite continued growth in overall premiums. This depression in profit margins has signaled a substantial market shift, highlighting the need for insurers across the region to review their operating models, arrest further declines, and pave the way back to margin growth.

Although the market continues to present growth opportunities, insurers across the GCC need to strengthen efficiency across their businesses to meet the sustained and continuous pressure on profitability. To improve overall profit performance and succeed in such a market, insurers should leverage the A.T. Kearney insurance profitability framework.

Based on the 2012 GCC insurance benchmark study of the top 30 GCC insurers, the A.T. Kearney insurance profitability framework is built on 10 core pillars that help achieve immediate impact across the entire organization and create a platform for sustainable, profitable growth.

To ensure this journey brings maximum value, we recommend a five-phase business overhaul.

• Enhance network and claims management.
• Build on the stronger claims and network platform with portfolio optimization. 
• Improve underwriting and optimize reinsurance.
• Complete operational effectiveness with sales effectiveness, business process reengineering, organization optimization, and capacity management.
• Optimize IT process and infrastructure, and asset liability management.

Creating a unique customer experience is one of the best ways to achieve sustainable growth, particularly in industries that are stagnating. If a telco, a utility, or an insurance company can create a highly differentiated customer experience that turns dissatisfaction or indifference into delight, it will recruit an army of vocal advocates online and offline, gain market share, and generate revenue growth.

Sound simple? It isn't, especially in sectors where the core product or service is difficult to differentiate. But it is doable, as Disney, IKEA, and ArcelorMittal have demonstrated. These firms are among the 15 Summer Champions identified by A.T. Kearney from an initial list of 500 as companies that outgrew their markets consistently over a five-year period despite being the largest players in their sectors.

Social media has become an integral part of our daily lives. We use Facebook, LinkedIn, Twitter, YouTube, Blogspot, and other social networking services to converse with friends and colleagues and to share family photos, videos, and important moments in our lives. It is a conversation over the (digital) backyard fence where your side of the fence is in Melbourne and your neighbor's is in Paris.

Yet people who skillfully blog and tweet with friends and family have not brought these same skills to the workplace. Although social media has distinct, valuable implications for corporations, most executives still see it as ... well, a mystery. The openness of Web interactions still baffles many companies as they try to squeeze the concept of social media—the square peg—into the traditional silos—the round holes—of marketing, sales, and operations.

We think it is time to change this. Rather than treat social media as a distinct element of a larger marketing strategy, companies should make it the core component of every customer-engagement strategy.

The Russian banking market can be described in two words: consolidation and adrenalin. Over the past six years, consolidation has resulted in some 300 banks being taken over by large state-owned or international institutions. But there's also a kind of frenetic, thrill-seeker side to the Russian banking market, most apparent in very little transparency, lots of governmental involvement, fluid regulatory environment, and capital flight. In short, this is not a market for the timid—it is dynamic and changing rapidly. Banks seeking success in Russia need not only a well-thought-out game plan, but also the flexibility to adapt to unforeseen events.

As background, Russia's banking market has experienced significant growth compared with those of other developing European countries. Indeed, the market's 27 percent compound annual growth rate from 2005 to 2010 was more than double that of its closest competitors, Turkey and Poland, both of which registered 13 percent CAGR over that time span. Clearly, there is room for even more growth, as banking-sector assets represent only 75 percent of gross domestic product (GDP), compared with developed economies, in which banking assets typically exceed 100 percent of GDP. Other room-for-growth indicators include a stabilizing macroeconomic scenario, strong resource prices, and solid demand levels. We expect Russia's well-capitalized banking industry to grow at a rate of 16 percent into 2015.

Russian banks did not go unscathed during the global economic recession. Between 2007 and 2010, the sector had a combined return on equity (ROE) of 12.4 percent, which was fairly healthy but lagged well behind two other strong emerging countries, Brazil and Turkey, both of which boasted ROEs of about 17 percent. In short, statistics show that even in the depths of the crisis, Russia's banking sector remained profitable and in 2011 bounced back to exceed pre-crisis profitability levels fueled mainly by the recovery of (parts of) provisions and significant increases in interest income.

Amid all this optimism, however, there remains some underlying risk in the area of non-performing loans. Although there was a noticeable improvement in portfolio quality in 2010, credit risk remained relatively high. And although the percentage of problematic loans decreased in 2011, it was a small decrease, leading us to believe that such loans could be an issue that banks will need to confront to keep their books in the black.

The state-owned Sberbank and VTB dominate the Russian banking sector, with institutions such as Unicredit, VTB 24, AlfaBank, RAB, Bank of Moscow, and Gazprombank among the leading competitors. This means that other banks must work hard to find their own sweet spots in the market. A comparison of the levels of concentration from 2010 to 2011 reveals that the trend is toward greater concentration by the largest banks, both state- and privately owned.

At first glance, all seems well for the Islamic banking industry. For years, many Islamic banks have witnessed double-digit growth rates, surpassing their conventional peers, and there is ample room for growth as Islamic banking rarely exceeds a third of total market share, even in the Gulf Cooperation Council (GCC) countries and Malaysia. Several potential markets with large Muslim populations remain largely untapped, such as India and the Commonwealth of Independent States countries, made up of the former Soviet republics. A closer look, however, suggests the market dynamics are changing. Two key indicators should be cause for reflection in the Islamic banking industry: slowing growth and eroding profitability.

To sustain profitable growth, a more sophisticated leveraging of the Islamic banking potential, much of whose potential has not yet been exploited, will be needed. Fundamentally, Islamic banks have two strategic choices—exploit the Islamic banking niche or compete head-on against conventional banks.

Retail banking is on the threshold of change, propelled by industry trends, technology, branch networks, new competitors, and more empowered, energetic, and engaged customers.

Considering the amount of media attention being given to the current British economic crisis, it's perhaps no surprise to learn that most Britons are feeling the squeeze financially. A.T. Kearney, in conjunction with an external research partner, surveyed more than 2,000 British adults on the ways in which they manage their finances and how this behaviour has changed since the onset of the financial downturn.

Some of the results are startling. For example, when asked to name their single most important consideration regarding their overall financial situation, nearly half of all respondents (45 per cent) say "making ends meet or providing for others". Only 16 per cent respond with "making investments" and 15 per cent with "paying off debts". As few as 12 per cent say their main priority is "saving for a rainy day."

More interesting still, a comparison of the pre- and post-crisis findings reveals significant differences. When asked to state what their priorities were before the economic crisis, only 28 per cent of the same people say "making ends meet or providing for others".

These results highlight a marked decline in day-to-day financial circumstances, with more people in post-crisis Britain now focusing on the basic essentials and fewer saving, investing, or paying off debts. This difference is slightly more pronounced among women, with 48 per cent stating that "making ends meet or providing for others" is their single biggest financial consideration, compared with just 29 per cent who say they felt this way before the recession.

It appears that with finances so tight, post-recession Britain has begun to adopt a "live for today" mentality, where families and individuals are more concerned about the financial resources they will need to make it to the end of the month—or even the end of the week—than about saving or investing for the future.