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Today, the banking industry faces unprecedented challenges: diminished profitability, new regulatory requirements, increased business complexity, a growing demand for analytics capabilities, and greater competition. Together, these challenges are forcing banks to maintain an ever-greater focus on meeting top priorities that will enable them to remain relevant.
Banking CFOs are being called upon to boldly lead their organizations to address these top priorities through a combination of transformation and business process outsourcing (BPO) programs designed to create sustainable, permanent cost reductions and new scalable capabilities. To read more, access the “Chief Financial Officer Survival in the Banking Industry” paper.
Download the full report [PDF, 1.13MB]
Banking chief financial officers (CFOs) are operating in a highly uncertain environment that is redefining the industry and threatening the survival of certain institutions. Key challenges include:
Diminished profitability. Before the financial crisis, top American and European banks regularly earned more than 25 percent return on equity. After 2008, profitability fell to the low single digits and has been slow to recover
New regulatory requirements. As the industry’s regulatory framework grows more stringent and prescriptive, compliance management becomes more complex and costly.
Increased complexity. Banks that failed to take advantage of integration opportunities following mergers in the past are now dealing with unnecessary complexity throughout their organizations.
Big data with little insights. Many organizations now have access to large volumes of complex data, but lack the skilled talent required to turn this information into actionable insights.
Increased competition from new entrants. As mobile and other technologies continue to evolve, banks are facing competition from non-financial players and teaming up with niche tech firms.
Looking ahead, chief financial officers (CFOs) in the banking industry must focus on:
Reducing costs. Even banks that have already announced and implemented cost-cutting measures must continue to find innovative ways to do much more with much less.
Managing risk and regulatory compliance. Forward-looking risk management models can provide valuable insights into capital and liquidity costs and help banks improve capital allocation decisions.
Simplifying processes. Teams must reevaluate their “business-as-usual” practices and examine how process reengineering and technology can help streamline interactions with stakeholders.
Accelerating Revenue Growth. Investments in “big-data” technology require investments in skilled analytics talent to develop and manage the process.
Leveraging their best people. As the pressure to deliver measurable results mounts, CFOs must be prepared to battle for top talent.
Chief financial officers (CFOs) in the banking industry are using a combination of transformation and business process outsourcing (BPO) to help their organizations reduce costs and create new capabilities.
The first step in transforming the finance and risk functions is to evaluate performance and identify opportunities for improvement in five key areas:
Next, banks must determine the most effective sourcing mix for achieving their objectives. Many financial institutions have successfully offshored between 40 and 60 percent of their finance and accounting activities. Now, the industry is examining how a similar model might be applied to risk data analytics and reporting, risk modeling and model validation.
Mark M. Robertson is a managing director in Accenture’s Finance and Risk Business Services. His work focuses on supporting clients in planning and executing large transformation projects and BPO delivery in finance and accounting, risk management and sourcing. He has served large clients in banking, high technology, oil and gas and telecommunications.
Keith E. Novek is a managing director in Accenture, and leads the Finance and Performance Management group in Financial Services. Keith is responsible for Accenture’s service offering in finance transformation and performance management, and has led enterprise-wide programs for several large banks and other financial institutions.
September 3, 2013
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