Since the financial crisis six years ago, banks have had to contend with the spiraling complexity of tightening regulations and increasing shareholder expectations. To understand the challenges facing banks today, our 2014 High Performance Finance Study surveyed more than 600 senior finance executives across the globe, including 82 from the banking sector. Results of the research highlighted six key findings among banking respondents:
Complexity is a key challenge.
Banks continue to struggle with a silo-based organizational model and governance.
Data remains poorly integrated and lacks consistency in many banks, but there is a strong desire to address this.
Senior banking executives point to talent scarcity as a key barrier to finance function performance.
Banks are turning their attention to growth after a longstanding focus on cost control.
Fundamental aspects of transformation remain a real challenge for banks.
CFOs as Architects of Business Value in the Banking Sector
Learn more about the top challenges facing surveyed senior finance executives in the banking sector.
Six years after the financial crisis, banks continue to contend with spiraling complexity. They must cope with the ongoing tightening of regulations and keep shareholders satisfied despite a difficult market backdrop. Internally, they are struggling with organizational models for their risk, finance and operations that may not be aligned with new realities, as well as poorly integrated data that lacks consistency.
Transformation and regulatory requirements are creating new demands for talent. At the same time, growth is back on the agenda following a protracted period of cost control. In order to respond effectively to these shifts, banks need to be able to measure and leverage the benefits of business transformation and partner with the finance function, which has a key role to play in meeting these challenges.
Our 2014 High Performance Finance Study comprised surveys of more than 600 senior finance executives across the globe and key sectors—of those, 13 percent were from banking. We also conducted interviews with a number of chief financial officers (CFOs) and other senior finance professionals from the banking sector.
Results of the research highlighted six key findings:
Complexity is a key challenge. High-performance businesses must find ways of managing complexity—for example, by standardizing and optimizing processes to streamline and simplify the organization.
Banks continue to struggle with a silo-based organizational model and governance. Currently, just 12 percent of respondents say that they have an enterprise-wide regulatory reporting center but within the next two years, 48 percent expect to be at this level.
Data remains poorly integrated and lacks consistency in many banks, but there is a strong desire to address this. Currently, 40 percent of banks responding to our survey say their processes are highly manual, with limited data lineage across multiple data sources.
Senior banking finance executives point to talent scarcity as a key barrier to finance function performance in a dynamic regulatory environment. Compared with the global sample, banking finance executives are almost twice as likely to point to finding and retaining a skilled finance workforce as one of the greatest challenges.
Banks are turning their attention to growth after a longstanding focus on cost control. Over the next two years, the number of respondents focused on investment in growth-oriented activities will increase from 37 percent to 51 percent.
Fundamental aspects of transformation remain a real challenge for banks. Banks need to move beyond a short-term, tactical approach to responding to new regulations, and determine how they can derive broader business benefits from these initiatives.
The finance function in the banking sector will continue to be challenged by complexity, and will need to find ways of managing it—for example, by standardizing and optimizing processes. These imperatives will drive CFOs to seek to tackle the problem of silo-based organizational models and governance, and to address the lack of integration and consistency of data. Competition for skilled risk, regulatory and compliance professionals will only intensify—attracting, retaining and developing talent will be a top priority.
Banks are set to step up investment and seek new market opportunities, and the CFO will play an increasing role in driving growth. The finance function also has an important part to play in guiding transformation efforts towards broader benefits for the business. The CFO will need to play the role of value architect, seeking to build capabilities for profitable growth, not just within finance but in the business more broadly.