Five key priorities for transforming banking and capital markets
07/13/20
Banking and capital markets
As lockdown restrictions begin to ease, the strategic focus within banking and capital markets (B&CM) can pivot towards how to succeed in the post-crisis world. While the road ahead is challenging, it became clear during a virtual round table meeting between PwC and banks that today’s circumstances also present a unique opportunity to accelerate transformation and reassert the value of B&CM organisations within society.
Remain relevant by pursuing an appropriate growth strategy
The banking world is changing rapidly, mainly due to increasing regulatory pressures and the rise of high-tech firms in the financial sector. Another important issue banks are facing is business model sustainability. “Banks that hope to remain relevant must take action and pursue an appropriate growth strategy,” says Martijn Jansen, partner at PwC and Banking and Capital Markets leader. “The economic impact of COVID-19 has created new urgency. Banks will have to act quickly to adapt to the new reality and prioritise five strategies: being part of the solution and re-establishing trust; updating and optimising operations; capitalising on opportunities for transformation; driving acquisition and collaboration; and balancing stability and growth.”
More enduring, strategic goals
Although COVID-19 is still taking a daily human and economic toll, banks can now shift their focus from crisis mobilisation and stabilisation to a new set of more enduring strategic goals. “During our virtual round table meeting, it became clear that banks are expecting a recession to hit Europe that will last several quarters before we return to previous GDP levels,” Jansen says. “We’re likely to see limited investment and consumption for at least two full years.”
Climate change and regulatory pressures remain challenging
The coronavirus crisis will continue to alter the world of financial services. Jansen predicts that Green Deals and sustainable finance will spark the most noticeable changes. “Despite the economic crisis, climate change is still on the agenda. Green growth policies will focus more on the future, and regulators and governments will continue supporting them. In addition, IFRS-based financial reporting for oversight purposes will remain challenging in these turbulent economic times, in part owing to general qualms about the reliability of these models and the fact that they are not designed to cope with today’s extreme circumstances.”
Strategic rethink strengthens operational resilience
Martijn Jansen is convinced that the coronavirus crisis, like every crisis before it, has created opportunities for a strategic rethink that will strengthen banks’ operational resilience, spurring innovation and growth. “We believe that our five priorities offer a valuable starting point for navigating through the crisis, capitalising on emerging opportunities, and being a force for good within society.”
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