The EY Global Banking Outlook 2018 found that about 85 per cent of banks globally cite implementation of a digital transformation programme as a business priority this year, with greater investment in technology to drive efficiency and growth. In a statement today, Ernst & Young Advisory Services (EYAS) said the survey, involving senior executives at 221 banking institutions across Asia-Pacific, Europe, North America and emerging markets, also found that managing evolving risks was viewed as critical for sustainable success. Partner and Malaysia Financial Services Banking and Capital Markets Advisory Leader, EYAS, Shankar Kanabiran said that 66 per cent of respondents in Malaysia aimed to reach digital maturity by 2020, echoing similar aspirations to other markets in the region and the world. “All of the banks surveyed in Malaysia have similarly identified recruiting, developing and retaining talent as one of the top priorities, with digitalisation and other market demands pushing for new or upgraded skills from the workforce,” he said.
Ten years after the financial crisis, banks are no longer overwhelmed by regulatory change programs or consumed by compliance requirements. In 2018, they are turning toward growing and optimising their businesses. To do so, banks must become more digitally enabled and effectively collaborate with new, innovative partners. In other words, they need to become more digitally mature.
In the EY Global banking outlook 2018 survey of 221 institutions across 29 global markets, banks were asked to assess themselves against five stages of digital maturity: not pursuing, beginning, transitioning, maturing and digital leadership. Few banks consider themselves maturing or a digital leader today, but more than half aspire to be digital leaders by 2020.
Digital leadership is required to fully capitalise on dramatically rising growth expectations. In the survey, 12% of respondents expect double-digit revenue growth in the next 12 months, rising to 31% over the next three years. Similarly, 7% of respondents expect more than 9% profit growth in the last decade, the strategic agendas for banks have included two priorities that are seemingly at odds with one another. On one hand, repairing their reputations has been an ongoing imperative in the wake of high-profile scandals, rising public scepticism and the emergence of compelling new players and services in the industry. On the other hand, growth and profitability have risen up the agenda as the industry has recovered from the global financial crisis.
For senior executives at global banks, the essential question is: Can we benefit society and improve our bottom line? By providing affordable and relevant financial products to individuals and businesses – including micro, small and mid-sized enterprises (MSMEs) – that lack access to these products, banks will both unlock growth and meet a critical societal need. Undoubtedly, financial inclusion will improve the lives of families, communities and companies around the world – and go a long way to restoring trust and confidence in banks. By serving underbanked individuals and businesses in emerging markets, banks can drive inclusive growth, restore trust and boost profit.