Broken Business Models (1)

Several recent reports and discussions have shed some interesting light on parts of the dilemma facing the banking industry.   The IBM report "Fit, focused and ready to fight" released in December 2009 is kind of humorous if you compare the title of the report to the content.  Ostensibly about what it will take for banks to get competitive, a careful read would lead one to the conclusion that, as currently structured, the banks are toast.  The core concept, represented as "Too Complex to Thrive", or "TCTT" has evoked positive responses from some of my colleagues in the industry, as capturing the heart of the matter in a spiffy new acronym.  The following chart seems to summarize the issue:

(You'll probably have to click on the chart to be able to read it, depending on your browser settings.)

Summarizing, this is trying to say that, in order to get back to the level of profitability that the banks have become used to in the last 5-10 years, they have to cut costs by roughly 40%.

Oops...