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Banking has been under intense scrutiny since the start of the credit crunch in 2007 and through the global financial crisis that ensued. As a result, banks have made changes to their businesses, improved the information they publish and strengthened governance and internal control. There have also been major reforms to how banks are regulated.
All this has made banks safer but has also added to their costs of doing business. Banks are now targeting lower returns to investors and reforms will also affect bank customers who may need to pay more for a narrower range of banking products and services.
This report highlights four long-term business challenges that banks still face in relation to: cultural change; the potential need to rethink their business models; challenges in measures used to assess their financial strength and performance; and demands for major IT investment. Responsibility rests primarily with bank boards and there are no quick or easy fixes.