China's November industrial production growth eased sharply from 5.9% to 5.4%, the lowest level since 2009. Global stocks plunged.
Retail growth also eased, growing at 8.1%, which is the weakest pace in 15 years.
Cracks are also continuing to show in Europe, with Italy, Germany, car sales, France, and Brexit all weighing on sentiment.
Fear has taken hold in equity markets after China's industrial production plummeted, sparking a selloff that spread globally. Cracks in the European economy are also continuing to show, weighing on those region's equities.
China's November industrial production growth eased sharply from 5.9% to 5.4%, the lowest level since 2009. The data pointed to weak performance in key export sectors such as computers, electronics and autos.
Retail growth also eased, growing at 8.1%, which is the weakest pace in 15 years, says Russ Mould, investment director at AJ Bell.
China's November trade data indicated signs of weaker growth in the rest of the world. Export growth declined from 15.5% to 5.4% with shipments to the EU and ASEAN countries showing weakness while exports to the US dropped to 9.8% from 13.2%, according to Societe Generale.
"There have been some troublesome figures coming out of China in 2018 and another batch has now served to drag down markets in Asia and Europe," Mould said. "China is finding it hard to sustain high levels of economic growth. There is some concern that the impact of the US-China trade war has yet to be properly felt, suggesting that China's economic data could be in for more shocks in early 2019 unless the countries secure a permanent truce."
Problems are also rumbling in Europe. Fears about Italy's budget remained front and center on Friday after the European Union suggested there was more to be done on the country's budget deficit. British Prime Minister Theresa May was rebuffed by EU leaders in her attempts to renegotiate her Brexit deal. Germany's problems continued with composite PMI numbers sliding in December.
It follows an already subdued mood in Europe. The European Central Bank announced Thursday that it cut its economic growth forecasts and would end its bond buying stimulus program. France's yellow-vest protests are harming the country's economy.
Here's a roundup of markets:
The JSE was down 1% and the rand slumped 1.5% to R14.37/$ early afternoon on Friday.
In Asia, the Shanghai Composite closed down 1.7%. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.3%. Japan's Nikkei also fell 2% Friday.
The Euro Stoxx 50 down 1.1% as of 10.20 am in London (5.20 am EST). The DAX, FTSE, and CAC were all down more than 1%.
US stock index futures are following suit. The Nasdaq, S&P 500 and Dow 30 all down about 1% in premarket.
China's woes weighed on commodities. Copper futures are down 1% while Brent crude continued to tumble despite agreed OPEC and Russian cuts last week. Oil is down 0.6%.
European car stocks also plunged after data showed new EU licenses fell 8.0% year-over-year in November following a 7.3% fall in October. Renault is down 3.6% while Volkswagen, Peugeot, Daimler are trading down 2.4%. Germany's BMW is down 1.9% and Fiat Chrysler is down 2%. Full year car sales are expected to drop to 2% in 2018, down from 5% in 2017.
US dollar index futures are up 0.5%.
Source: Business Insider

As retail banks grapple with rapidly advancing technology, higher customer expectations, and tighter regulation, they must redouble efforts to personalize their product and service offerings if they hope to position themselves optimally for the future, according to a new report by The Boston Consulting Group (BCG). The report, titled Global Retail Banking 2018: The Power of Personalization, is being released today.

The report, the latest in a series of annual BCG studies of the retail banking sector, provides a comprehensive look at the industry, examining such topics as global and regional growth, regulation, performance dispersion, digital transformation, enhanced personalization, and improved continuous delivery.

“Banks are in demonstrably different places today, using their own particular strengths to overcome obstacles,” says Ian Walsh, a BCG senior partner and a coauthor of the report. “Many banks have made progress in digitizing for cost, but they still need to move from pilots to large-scale initiatives to reap the benefits of their digital investments. Banks are less far along in digitizing for value. The goal of this more ambitious effort is to understand and serve the customer better and, in doing so, to earn more revenue per customer and increase retention. This can happen only through personalized value propositions.”

Retail Banking Growth

According to the report, retail banking is responsible for roughly half of all banking revenues worldwide, with the rest coming from corporate banking and sources such as asset management, investment banking, proprietary trading, and bancassurance. That share is not likely to change dramatically between now and 2021, a period during which BCG expects retail banking revenues to rise by 5.3% annually to reach approximately $2.54 trillion. If achieved, this compound annual growth rate would be the highest in the sector in at least a decade. Although some trends in banking—most obviously digitization—are relevant across all regions and markets, retail banking is inherently a local business, inextricably bound up with each country’s economic fundamentals, regulatory landscape, and competitive dynamics.

The Impact of Regulation

The broad outlines of most countries’ top-level regulatory reform packages are now in place, the report says, and the regulations focus on three areas: financial stability, prudent operations, and resolution (a bank’s responsibility to put forward a plan in the event of its own failure). The challenge for banks is to remain efficient as they begin implementing the regulations, which have increased threefold since 2011. Regulations will have a larger near-term impact in some regions than in others.

Performance Dispersion

BCG’s Retail Banking Excellence Benchmark (REBEX)—a yearly analysis that permits comparison across hundreds of metrics—indicates that retail banks are not meeting the current challenges with equal success. In fact, over the past three years, the gap between the cost-income ratio of first-quartile banks and that of median banks has increased at a compound annual growth rate of 13%. This performance split is due in part to circumstances specific to different regions. But it is also attributable to the path that each bank charts on its own digital transformation journey.

Digital Transformation

For many retail banking executives, a key question is how efficient and digitally advanced their organizations are compared with their immediate competitors. An assessment of progress on digital journeys has two critical dimensions. The first is digitizing for cost, which refers to using digital technologies to create operational efficiencies. The second, digitizing for value, refers to using digital technologies to create a fundamentally better experience for customers. Both globally and regionally, banks display a wide range of progress in these areas.

Personalization and Continuous Delivery

Personalization is emerging as a primary mechanism for increasing both customer satisfaction and economic value in banking, the report says. Banks should use improved data and technology to get a clear sense of each customer’s financial and behavioral DNA, and develop individualized offers on that basis. Banks that succeed with personalization will more effectively acquire, engage, and retain customers, adding to their growth and profits. The report adds that, in the future, convenience will increasingly revolve around the concept of always-on banking. To remain flexible, banks must build sophisticated routing platforms that ensure continuous delivery of the personalized experience—through digitally empowered relationship managers, automated customer-care centers, and self-service technologies.

“Retail banks need to grapple with near-term challenges while still investing in capabilities and services to remain relevant in the future,” says BCG’s Ian Walsh. “Short- and long-term goals will occasionally conflict in the coming years, and each bank will have to figure out the tradeoffs it must make. But one thing is clear: the customer can never be an afterthought.”

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