Six years after the financial crisis, what does the future hold for the banking sector? Insights can be found in Accenture’s latest High Performance Finance Study, which surveyed more than 600 senior finance executives across the globe—including 82 from banking. Six key findings highlight the challenges facing banks and their readiness to transform for the future.
Finding 1: Complexity
Although complexity is a natural by-product of growth and success, it remains the top challenge for banks worldwide. As well as the ongoing fall-out from the financial crisis, local and global regulation and capital requirements are becoming more stringent, forcing banks to rethink their business models and strategic priorities. At the same time, they are under pressure from shareholders to grow revenue streams, increase market share and maintain margins. By standardizing and optimizing internal processes to streamline and simplify their organization, banks will be in a stronger position to manage this complexity.
Finding 2: Organizational model & governance
At present, almost one-third of banking respondents say their risk, finance and operations remain siloed. Only 12% have an enterprise-wide regulatory reporting center. But within the next two years, 48% want to be at this level. A centralized regulatory office, for example, a center of excellence (CoE) offers banks the opportunity to manage the impact of new regulations in a more efficient way.
Finding 3: Data shortcomings
Currently, 40% of banks responding to our survey say their processes are highly manual. But regulations such as the European Union’s Common Reporting (COREP) and Financial Reporting (FINREP) standards are forcing them to take action to address data shortcomings and there is also a strong trend towards a more holistic model. Within the next two years, just 11% of bank survey respondents expect to rely on manual processes with limited data lineage across multiple data sources.
Finding 4: Talent scarcity
Banks in our survey cite talent as the number one challenge they face in addressing new risk, regulatory and compliance requirements. Competition for skilled professionals in these areas has become extremely intense. Many banks simply do not have the capabilities within the traditional risk organization, and therefore need to hire externally or develop the skills within their existing team.
Finding 5: Renewed focus on growth
In the wake of the financial crisis, the growth agenda at many banks was put on hold. But, as the industry enters a period of greater stability, they are once again investing and seeking new market opportunities. As they do this, banks will need to leverage the investments they have already made in initiatives such as Know Your Customer (KYC) and anti-money laundering (AML). These give banks access to a wealth of transactional data that can also be used to drive growth. Finance leaders are also playing a bigger role in growth—among our sample within banking, 58% say that their influence in identifying growth opportunities has increased.
Finding 6: The fundamentals of transformation remain a challenge
Many banks continue to struggle with fundamental aspects of business transformation, in particular, measuring the business benefits. In the context of responding to regulatory change, this has important implications. Banks need to move beyond a short-term, tactical approach to responding to regulation, and determine how they can derive broader business benefits from these initiatives. This involves moving beyond compliance to use these investments as a way of improving the management of the business.
For more insights, read the Accenture 2014 High Performance Finance Study Banking Report
