The world of finance is seeing many changes. A situation has arrived where companies are moving towards a bar-bell structure. They need to decide to move in one way or the other. It is decision time when they need to move with the markets if they want to survive.

Banking experts like Bahaa Abdul Hussein are of the view that a hurricane is on its way. The economic situation in the world is fluid. There is a worry that a recession could be a possibility soon. In this scenario, the time has come for banks and fintech companies to decide one way or the other.

The Barbell scenario

The present trends could lead to a situation where two extreme situations are possible. One scenario is that large financial firms would prosper and would have multiple products to offer to customers. The other scenario is that smaller firms would bloom. They would do this by becoming niche players focusing on a segment for whom they offer specialized products and services.

Banks and large fintech companies who are able to use digital transformation effectively can succeed in this scenario. The niche players could include both new players and existing traditional firms that are ready to innovate.

Why it is decision time?

Many traditional banks and financial companies find themselves in the middle of the bar-bell. They are now in a dilemma over the direction to choose. They need to broaden the services they offer and even look at acquisitions or mergers. Doing so will help them reach the end of the spectrum with larger companies.

They can also choose to become niche players and look at specialization. They will need to make a decision either way. There is no option to remain in the middle. Companies would stay at the middle of the bar bell for a transition period while they decide which way to go.  But they cannot hope to remain there for a long time and avoid taking a decision.

Those in the middle would get squeezed out from both ends and be left with nothing. It is time now to look at new strategies for success. For smaller firms the way forward calls for digital transformation. It would be easier and cheaper for them to go the focused way rather than try to reach the other end of the barbell.

The way forward is to go narrow and be more focused. And they need to do it fast before they are overrun by competition. Thank you for your interest in Bahaa Abdul Hussein blogs. For more stories, please stay tuned to www.bahaaabdulhussein.com