5 Things All Banks (& Corporates) Must Do Right NOW

Over the weekend i took a read of the EY Global Banking Outlook 2017 report. It’s a good read, the key and recurring message is “Uncertainty is no excuse for inaction”. Its a global banking report, so of course banks are the focus but what i found particularly interesting was that many of the themes were also applicable to corporates. Please read the report for full details, following are my notes:

“Uncertainty cannot be an excuse for inaction” – EY

Its fair to say there is a fair amount of uncertainty out there. EY highlight the following examples:

  • How will Brexit play out for the United Kingdom (UK) and the European Union (EU)?
  • How will President Trump forge banking regulation, how will the EU respond to any such policies
  • Risk and regulation are likely to dominate the financial services sector

Priorities for Banks:

  • Handle any reputational risk
  • Ensure regulatory compliance
  • Improve data security and cybersecurity
  • Ensure any capital, liquidity and leverage ratio requirements are met
  • Recruit and retain the best talent

What Banks (and Corporates) Must Do Right Now:

  1. Reshape – organisational structures need to be overhauled
  2. Control – financial risk and performance should be appropriately sourced, measured, validated and reported
  3. Protect – organisations need to recognise both internal and external threats to business continuity
  4. Optimise – new operating models and technologies need to be used
  5. Grow – to be profitable, banks need to define/understand their customers and use analytics to better serve them
ey-banks-must-do

Source: EY – Global Banking Outlook 2017

1. Reshape – Set a Clear Strategy & Organisational Structure

Banks need to know where they are heading by:

  • Knowing what their core strengths are and outlining a future business model
  • Defining a future business model
  • Implementing a step by step plan that will help the bank get to their future state business model
  • Revamping the legal entity structure with a view to creating a global structure that overlooks local businesses
  • Promoting an innovative culture that starts at the top
  • Identifying the type of innovation operating model the bank wishes to implement – centralised, decentralised or hybrid

2. Control – Strengthen Controls

  • Ensure front-line staff understand the risks and adopt a ‘i am accountable’ culture
  • Highlight responsibilities across all teams
  • Implement cross-organisational common processes and tools
  • Improve the way in which the balance sheet is managed
  • Ensure any external providers (vendors/partners) adopt the same understanding and controls
  • Improve the way in which a crisis is managed by planning and creating an action plan
  • Leverage data, implement analytical tools and identify methods to better manage risk (robotics, centres of excellence)

3. Protect – Reduce Internal and External Threats

  • Create a governance and decision-making structure that enables the organisation to better handle risk and various threats
  • Ensure cybersecurity is embedded into all new initiatives
  • To help protect against cyber-security threats utilise AI (artificial intelligence), advanced analytics and any other tools
  • Recognise the cybersecurity skills shortage and educate and train the appropriate teams in your organisation
  • Create standards, procedures and training and ensure these are followed throughout the organisation
  • Invest in RegTech solutions with a view to making compliance cheaper

4. Optimise – Use Technology to Improve Efficiency

  • Implement robotic process automation (RPA) to lower the cost of high frequency manual roles
  • Utilise big data to help modelling capabilities and support business decisions
  • Create a strategy to strip out the old (legacy systems) and implement a new banking system
  • Consider the utility model by working with others in the industry by creating economies of scale
  • Identify blockchain opportunities
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5. Grow – Through Innovation made Possible by Staff & Technology

  • Ensure customer Trust by respecting customer privacy and data, and protecting their customers from cybersecurity threats
  • Use big data and analytics to gain a deeper understanding of your customers
  • Invest in your front line staff so that they can better serve your customers, employ technology savvy staff to help build customer focused products and services
  • Identify the products and channels through which those products should be made available to your customers
  • Instil a innovation based culture throughout the organisation

 

Interesting stuff, eh…?

 

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