NEW YORK (CNNMoney.com) - Increasing scale will continue to be one of the top priorities for the banking industry, with international markets representing the most potential for growth, said Citigroup's former chief operating officer Robert Willumstad.

Speaking on a panel at the Standard & Poor's Financial Institutions conference in New York, Willumstad said long-term growth for Citigroup (Research) will come from its consumer business. He added that emerging markets, particularly China and India, will serve as its main growth engine given the large populations and the countries' growing economies.

And that's the direction most savvy financial institutions are likely to take, said Merrill Lynch (Research) senior vice president H. McIntyre Gardner.

"It's a big world out there and there is a lot of opportunity for growth and profit," he said.

But he added that financial institutions looking to expand internationally will have to narrow their focus to specific, attractive markets.

That goes for the domestic market as well. The panelists said that banks are increasingly looking to increase their size whether through organic growth or acquisitions in order to compete with small regional players. But, Gardner warned that banks that are too diversified and are too large in scale, may have a tougher time growing revenue.

"When institutions spread themselves too thin is where you run into trouble," Gardner said.

Citigroup's Willumstad said that increased competition poses the biggest challenge for the banking industry going forward.

"The ongoing pressure on institutions for (higher) short-term earnings isn't always in the best interest of companies," he said.

Merrill's Gardner added that while keeping an eye on short-term earnings growth is important, banks that are confident and stay on course with their long-term growth strategies will be more likely to shrug off short-term earnings misses.