These threats have been identified as the weak global economy, digitisation and regulation.
More severe digital disruption could reduce EU banking profits from their current £89.6bn to £40.7bn in 2020.
By 2020, returns on equity could drop by half to 1-2%.
McKinsey suggests that banks could address these headwinds by engaging in a fundamental transformation focused on resilience, reorientation and renewal.
These changes include repricing and greater intermediation, reducing short-term costs, managing capital and risk, and protecting core business assets.
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Other changes include reorienting their businesses around technology and restructuring their organisations.
The report’s authors Denis Bugrov, Miklos Dietz and Thomas Poppensieker said: “Banks must adapt to the reality of a macroeconomic environment that offers a number of risks and limited upside potential.
“Meanwhile the pressures of digitisation, which boosts competition and compresses margins, are growing.
“Some emerging-market banks are managing well, offering innovative mobile services to customers.
“But our report finds that in the largest emerging markets – China and India – banks are losing ground to digital-commerce firms that have moved rapidly into banking.”
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