FINANCE

The Change Perspective: UK’s financial institutions shift focus to revenue growth in 2019

  • For the first time since the 2008 recession more UK banks (66%) are focussing on revenue generation than cost reduction (57%) activities in the year ahead
  • A significant investment in data analytics (76%) will allow financial institutions to seek new ways to extract value from their customer base
  • Less than one in ten banks (9%) are actively looking at cryptocurrency as interest in the technology diminishes

    MikeHampson

    MikeHampson

Since the 2008 financial crisis, banks have focussed on restructuring, cost reduction, and rebuilding balance sheets. While a majority of UK institutions (57% compared to 79% in 2018)are still reporting cost reduction activities for 2019, there is a marked shift to revenue generation (66% v 58%) and product development (64% v 54%). Entering new markets (35% v 39%) remains a key area of focus.

That’s according to the latest Bishopsgate Financial Change Perspective, whospoke to COOs, CIOs and Heads of Change and senior programme managers from over 30 prominent financial institutions in the UK.

This change in emphasis will mean that organisations will have to consider their capabilities to deliver change that grows revenue, as the demands of building and growing business are very different to those of cutting back and restructuring.

The ongoing drive towards digital is also forcing organisations to revisit existing operations and processes (, while the adoption of robotics necessitates reviewing and reengineering legacy processes.

Technology and Innovation

Technology has always been a driver of change in the banking sector and this year’s research reflects this trend. Big Data (57%) cybersecurity (61%)and mobile (53%) all feature prominently in plans for 2019, reflecting the ongoing push to digital.

Elsewhere, the significant investment in data analytics (76%),supports the general shift towards revenue generation, with financial institutions seeking new ways to extract value from their customer base.

Last year’s efforts to achieve GDPR compliance and the widely reported scandals involving Facebook and Cambridge Analytica are evidence that banks will need to be extremely careful how they source, use and maintain the data they use to drive revenues.

Crypto woes

In light of a constant stream of reports on the impact that robotics will have on jobs, it seems that the technology is ready for wide scale implementation in the sector. Indeed, nearly half of all UK banks surveyed (47%) reported that they have change activity planned in the area as the desire for automation grows.

The report also reveals that banks are continuing to actively explore Blockchain (31%) as they examine suitable application of the technology. Despite what appears to be a new announcement each week, no projects have yet progressed to large-scale implementation, suggesting a continued need for education across the industry.

Meanwhile, the collapse of the Bitcoin price in 2018 has seen interest in Cryptocurrency (9%)wane over the past year, while professionals citing the Internet of Things (14%) as an area of focus remains subdued.

Commenting on the report, Mike Hampson, CEO of Bishopsgate Financial says: “The re-shaping of the sector is one of the overriding themes of the report. Whatever the cause – the need to compete with FinTech competitors, cost reduction, or the changing demands of customers – activity supports the ongoing drive towards digital platforms and technology.

“It’s pleasing to note that a significant number of financial institutions are looking at initiatives to increase revenue. Whether by entering new markets, expanding market share, or developing new products, this bucks a trend from last year where there was a more pronounced focus on cost reduction.”

Hampson concludes: “Our goal with this report is to help our clients and the industry prepare for the impact of those changes in the coming year and beyond.”

Now in its second edition, the Bishopsgate Financial Change Perspective speaks to industry leaders at the forefront of change, including COOs, CIOs and Heads of Change and senior programme managers from over 30 prominent financial institutions in the UK. The research took place during the 2019 budgeting cycle, ensuring the critical priorities were identified for the year ahead.

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