Sixty per cent of banks to invest in new technologies
The continuing need to strike a clear balance between risk management and innovation is seeing 60 per cent of banks citing their intentions to invest in new technologies over the next 12 months, despite not believing it will improve their overall financial performance, according to Ernst and Young (EY).
Technology would spur growth, but it had not yet instilled confidence in banks of their financial future, according to the EY Global Banking Outlook 2017.
The report said the top strategic priorities for banks globally in 2017 were managing reputational risk (69 per cent) and meeting compliance standards (66 per cent), while remediation of issues and cyber security were the top foci for Australian banks.
EY Oceania banking and capital markets leader, Tim Dring, said the findings from the outlook indicated that banks were willing to try new things to achieve profitability, rather than rely solely on market movement.
“In the current environment, the banking industry must innovate in order to grow,” he said.
“Banks right across the glove are looking for alternative ways to reshape, organise and optimise their businesses, so they can be more efficient, while also meeting the needs of regulators and consumers,” he said.
The outlook assessed findings from around 300 banks across the Americas, Africa, Europe, Asia and Oceania. Dring said they had all felt the pressure of competition in the market and the rise of fintech disruptors, but should consider partnerships with enablers.
“They need to be relentless in driving out costs and managing risks. The key to success will be building a better ecosystem, not a bigger bank,” he said.
“Banks need to do less – streamlining operating models and partnering with fintech, blockchain firms and other industry services to deliver better services.”
The outlook suggested five themes for rebuilding trust and profitability across the sector:
- Reshape the industry across four primary business models (local boutiques, global boutiques, regional champions, and universal super banks.);
- Control risk management by increasing focus on vendor management;
- Protect from internal and external threats to minimise financial crime such as fraud and money laundering;
- Optimise by embracing technology and employ management to make progress in it; and
- Grow by investing in staff and customer-facing technology to defend market share.
“Even in today’s challenging and volatile global market, uncertainty cannot be an excuse for inaction,” Dring said.
“Banks must take decisive steps to optimise their businesses, improve financial performance and drive sustainable growth.
“The report sets out an ambitious agenda for global banks in the year ahead.”
AUTHOR
Hope William-Smith
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
