Investment Banking Impacted by Global Consumer Growth

The shifting dynamics of the global economy are impacting banking, capital markets and retail sales. Consumer growth in developing nations is causing retailers to shift their focus from the United States, Canada and the United Kingdom to places like China. In turn, this is changing the skills needed to compete in the investment banking industry.

Change to Global Brands

Goldman Sachs reports that information technology has transformed many local goods or services into global brands.  Communication across borders between consumers continues to grow causing the spread of niche products to wider audiences. As a result, prototyping new products or services now requires a larger emphasis on foreign markets and a broad spectrum of consumer tastes. China’s markets are becoming more consumer-based, and Latin American economies are seeing growth in infrastructure and disposable incomes.  Investment banks have to account for these trends when making capital allocation decisions.

Shift to Ecommerce

The scope of e-commerce is expanding as consumers become more familiar with the Internet. Goldman Sachs also notes more customers are now purchasing products without actually touching, feeling or trying them on, which is causing corporations to shift their operational focus to online marketplaces. Businesses large and small are discovering that e-commerce is cost-effective relative to traditional retail shops in malls or outlets. The ability to reach global audiences via social media pages, websites and other online platforms is expanding the reach of even the smallest of businesses. Mastering technology and cultural gaps will be essential for entering foreign economies.

Technological and Cultural Insight

In order for investment bankers to be successful, they need to understand the shifts in global consumer activity and the impact of ecommerce on retailing. Advances in technology are at the core of the changes seen in consumerism, and the Internet is making it necessary to rethink traditional business models.  Social media, online marketplaces and search engine optimization are changing the dynamics of retail activity. Technological savvy will provide investment bankers the insight needed to make effective decisions.  Investment bankers will also have to embrace new languages and cultural norms to network in foreign markets.

The skills needed to succeed in investment banking are changing due to shifts in consumer growth. New political systems, languages and laws are impacting investment decisions.  In order for financial professionals to remain competitive, they will have to adapt to the ever-changing conditions of the global economy.

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