Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Norwegian Banks in the Age of Globalisation

23.10.2008
Norwegian banks are not much at risk by globalisation, asserts professor Carl Arthur Solberg at BI Norwegian School of Management. He outlines three future scenarios for the banking industry in 2018.

There is no doubt that Norwegian banks will be affected by the increased globalisation, as the present financial turbulence amply demonstrates.

There are nevertheless strong factors that will counteract and balance out the most dramatic effects of globalisation.

“These factors are first and foremost to be found in the general public’s loyalty to their local banks; often a result of tradition, local patriotism and the banks’ local knowledge. There is also the matter of legislation, in particular the Savings Banks act, which will serve as a counterbalance to globalisation,” Carl Arthur Solberg points out. He is professor of international marketing and management at BI Norwegian School of Management.

Together with Ole Helge Lien, MBA, he has conducted a study into the globalisation of the banking industry. They have paid particular attention to the effects the increased globalisation might have on Norwegian banks. The findings of this study have been published in a new research report by the BI Norwegian School of Management.

Three scenarios

The BI researchers have outlined three different scenarios for Norwegian banks in the next ten years – up to 2018: a baseline scenario, a technological breakthrough and the global banking industry.

The impact of the globalisation will be more or less dramatic for Norwegian banks, depending on which scenario proves right.

In the case of the baseline scenario, Norwegian Banks do not face much risk from globalisation, according to Solberg and Lien.

“This is not to say that it’s necessarily business as usual for the banks,” underlines Mr. Solberg.

Several development trends combine to impact on the external conditions for Norwegian banks. More terms and conditions for the development of Norwegian banking will be decided by the EU.

Amendments to the EU regulations as well as technical innovations will play an important part in shaping developments in the future. EU legislation on the role of the supervisory authorities and changes to tax rules will also have an effect on the banking industry and make it easier for banks to compete in other countries.

Technological breakthroughs will change the ground rules

Economies of scale in the field of IT or back office do not seem to have changed the banking business much to date.

“New technologies and new uses of technology might change this picture, however,” explains Mr. Solberg, introducing a new potential scenario for Norwegian banks: the technological breakthrough.

New technologies may enable more new players to take on new roles in the financial markets. This might consist of new mobile and internet banks, or of entirely new constellations, such as a cooperation between banks, data transmission companies (e.g. Telenor) and service suppliers (application companies, such as Norwegian Luup).

DnBNOR facing globalisation pressure

Should the scenario with global banking business prove right, this might have a significant impact on Norway, especially in the savings bank sector, Solberg predicts. This will likely lead to mergers between the savings banks, and probably also acquisitions by foreign banks looking to get a foothold in Norway/Scandinavia.

This development will depend largely on internal political processes in the EU, where considerations on the savings banks’ status is a central issue.

In this scenario, even the largest bank in Norway, DnBNOR, will feel the pressure from the outside, according to the researchers.

“The overriding problem for this bank is that it has been slow to move towards internationalisation, and is thus left without any clear-cut alternatives in a more globalised banking world,” the report states.

The report was completed prior to the recent dramatic developments in the financial markets, and has therefore not accounted for these in its assessments.

“The banking industry is likely to see further consolidations in the near future, and this will pose new challenges to Norwegian banks. It is also probable that the globalisation trends will be put on the back burner for some time, so that a new banking structure gets time to settle in the wake of the crises,” says Mr. Solberg.

The report discussed the potential future strategy for five Norwegian banks: Sparebanken Lillestrøm, SR Bank, DnBNOR, Storebrand Bank and Nordea.

Reference:
Solberg, Carl Arthur and Lien, Ole Helge: Globalisation of the banking industry: Its impact on Norwegian banks and the Norwegian banking industry, Research report, BI Norwegian School of Management (in Norwegian).

Audun Farbrot | alfa
Further information:
http://www.bi.no

Further reports about: DnBNOR Globalisation Norwegian banks banking industry future scenarios

More articles from Business and Finance:

nachricht Mathematical confirmation: Rewiring financial networks reduces systemic risk
22.06.2017 | International Institute for Applied Systems Analysis (IIASA)

nachricht Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Neutron star merger directly observed for the first time

University of Maryland researchers contribute to historic detection of gravitational waves and light created by event

On August 17, 2017, at 12:41:04 UTC, scientists made the first direct observation of a merger between two neutron stars--the dense, collapsed cores that remain...

Im Focus: Breaking: the first light from two neutron stars merging

Seven new papers describe the first-ever detection of light from a gravitational wave source. The event, caused by two neutron stars colliding and merging together, was dubbed GW170817 because it sent ripples through space-time that reached Earth on 2017 August 17. Around the world, hundreds of excited astronomers mobilized quickly and were able to observe the event using numerous telescopes, providing a wealth of new data.

Previous detections of gravitational waves have all involved the merger of two black holes, a feat that won the 2017 Nobel Prize in Physics earlier this month....

Im Focus: Smart sensors for efficient processes

Material defects in end products can quickly result in failures in many areas of industry, and have a massive impact on the safe use of their products. This is why, in the field of quality assurance, intelligent, nondestructive sensor systems play a key role. They allow testing components and parts in a rapid and cost-efficient manner without destroying the actual product or changing its surface. Experts from the Fraunhofer IZFP in Saarbrücken will be presenting two exhibits at the Blechexpo in Stuttgart from 7–10 November 2017 that allow fast, reliable, and automated characterization of materials and detection of defects (Hall 5, Booth 5306).

When quality testing uses time-consuming destructive test methods, it can result in enormous costs due to damaging or destroying the products. And given that...

Im Focus: Cold molecules on collision course

Using a new cooling technique MPQ scientists succeed at observing collisions in a dense beam of cold and slow dipolar molecules.

How do chemical reactions proceed at extremely low temperatures? The answer requires the investigation of molecular samples that are cold, dense, and slow at...

Im Focus: Shrinking the proton again!

Scientists from the Max Planck Institute of Quantum Optics, using high precision laser spectroscopy of atomic hydrogen, confirm the surprisingly small value of the proton radius determined from muonic hydrogen.

It was one of the breakthroughs of the year 2010: Laser spectroscopy of muonic hydrogen resulted in a value for the proton charge radius that was significantly...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

ASEAN Member States discuss the future role of renewable energy

17.10.2017 | Event News

World Health Summit 2017: International experts set the course for the future of Global Health

10.10.2017 | Event News

Climate Engineering Conference 2017 Opens in Berlin

10.10.2017 | Event News

 
Latest News

Terahertz spectroscopy goes nano

20.10.2017 | Information Technology

Strange but true: Turning a material upside down can sometimes make it softer

20.10.2017 | Materials Sciences

NRL clarifies valley polarization for electronic and optoelectronic technologies

20.10.2017 | Interdisciplinary Research

VideoLinks
B2B-VideoLinks
More VideoLinks >>>