In last year’s Global Banking Outlook, we forecast profitability pressures for banks in 2020. What we didn’t expect was a pandemic. The onset of the COVID-19 pandemic has been a monumental challenge for all sectors, including banking. Even though heightened volatility drove record sales and trading revenues, lending fell significantly and average returns on equity remained in single digits for the first half of the year.
Still, there is reason for optimism. Banks have shown an astonishing ability to adapt to change and to play a leading role in sustaining the economy. And, now they have a once-in-a-generation opportunity to accelerate positive changes made during the pandemic, to get leaner and grow at the same time. To connect more deeply with customers. And, to cultivate the innovation that will drive a more sustainable future for the industry and for everyone.
But transformation amid such difficult conditions will not be easy and must come from a position of strength. Last year, our Global Banking Outlook highlighted how the world’s most consistently profitable banks focus on three key pillars – cost, resilience, and customer-centricity. As banks accelerate their transformation plans, they should take key actions in these areas.