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