Only 25 Percent of Investors Are Confident in Banks’ Digital Strategies According to Oliver Wyman
17 1월 2020 - 4:09AM
Business Wire
Disconnect Between Long-Term Vision and
Short-Term Performance Creating Collision Course for Financial
Services Industry
Financial services firms are trying to build the firm of the
future, but their lack of progress is stoking deep skepticism among
investors, according to Oliver Wyman’s annual State of the
Financial Services Industry report. Only 25 percent of investors
surveyed are confident that firms’ digital transformation
strategies will be effective, and less than 1 percent believe the
plans are both clear and credible.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20200116005756/en/
When Vision and Value Collide, Which Will
Win? (Graphic: Business Wire)
“The need to invest and build the firm of the future is
pressing, but the window to deliver is closing and a reckoning is
inevitable,” said Ted Moynihan, Managing Partner and Global Head of
Financial Services. “While some breakthroughs are occurring,
macroeconomic conditions are going to put a lot of pressure on
investment in areas where there has not been a positive enough
impact yet on the bottom line.”
Investor Disconnect
According to the report, When Vision and Value Collide,
financial services firms spend an average of 5 percent of revenue
per year on transformation -- but investors say they do not
understand what firms are investing in, or why. They don’t know
what transformation includes or what the endgame looks like.
Investors don’t receive useful metrics on progress, and they are
distrustful of the cost-benefit case of significant technology
investments.
The ambitious, large-budget transformation programs banks talk
about and the actual return they produce have left the investor
community struggling to make sense of what is really happening.
Ninety-eight percent of European banks mentioned “digital” in their
external communications, compared to only 27 percent of analyst
research reports.
The Window is Closing
This disconnect is happening at a time when valuation growth
among big tech and fintech firms has eclipsed financial services.
Since 2010, price-to-earnings ratio for fintechs have steadily
risen, with multiples now twice financial services firms. Banks
have seen the price-to-earnings multiple fall from 14 times to 11
times.
In mature markets, low interest rates have already delivered
cyclical revenue declines that are worse than any digital
disruption. Oliver Wyman estimates that 75 percent of the value
erosion in European banking has come from macro factors and
regulation, and only 25 percent from new entrants, fintech and
margin compression. A further downturn could have a severe impact
on investment budgets.
The major recessions and financial crises of the past 30 years
have coincided with single-year losses for banks of between 10 and
50 percent of revenue, likely far exceeding the funds available to
invest.
While revenue growth is low and macroeconomic conditions are
deteriorating, the need for financial services firms to invest in
transformation remains pressing. Challenging returns and
overcapacity mean a step-change in productivity is often needed.
Longer-term, the increasing competitive pressure from technology
companies will increase the pace of financial services offerings
being brought to the market.
When Vision and Value Collide, Which Will Win?
Some firms have backed their vision mindset and spent
aggressively on innovation and transformation efforts, often with
disappointing bottom-line results. In other firms the value mindset
has dominated, leading to a myriad of small changes with known but
often low-impact outcomes.
Firms will need a mix of both vision and value mindsets to
succeed over the short and long term. Right now, firms are
struggling to get investment to their strategic priorities, with 40
percent of change budgets still going toward mandatory regulatory
changes. Light touch management of digital initiatives will come to
an end, and a more disciplined, interventionist approach will
emerge.
Oliver Wyman see five keys for firms to get the balance right:
1) take a surgical approach to investment, avoiding me-too digital
capability building; 2) focus on a smaller number of well-funded
growth initiatives; 3) increase focus on productivity gains from
investment in technology; 4) develop better science on how to
measure and manage change; and 5) improve external communications
so investors can better understand what drives performance and
allow progress on long-term change to be tracked.
“Winning firms will need a mix of both the vision and value
mindsets, but many will get the balance wrong,” concluded Moynihan.
“Each company needs to find the right mix to bring vision and value
together and agree on a path forward – all while the threat of big
tech looms, a recession may be coming, and investors are growing
increasingly impatient.”
About the Report
When Vision and Value Collide is Oliver Wyman’s 23rd annual
State of the Financial Services Industry report. This year’s report
features insight from a survey of investors, analysts, and
management teams and analysis of investment levels and progress.
The report is broken into three sections – investor pressure, the
closing window to deliver, and how companies can make the
vision/value mindset collision work for them. The report will be
discussed at a panel during the World Economic Forum Annual Global
Meeting in Davos on Tuesday, January 21.
About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With
offices in 60 cities across 29 countries, Oliver Wyman combines
deep industry knowledge with specialized expertise in strategy,
operations, risk management, and organization transformation. The
firm has more than 5,000 professionals around the world who work
with clients to optimize their business, improve their operations
and risk profile, and accelerate their organizational performance
to seize the most attractive opportunities. Oliver Wyman is a
wholly owned subsidiary of Marsh & McLennan Companies (NYSE:
MMC). For more information, visit www.oliverwyman.com. Follow
Oliver Wyman on Twitter @OliverWyman.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200116005756/en/
FRANCINE MINADEO Oliver Wyman Direct: 212-345-6417 Mobile:
917-573-8826 Francine.Minadeo@oliverwyman.com
Marsh and McLennan Compa... (NYSE:MMC)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Marsh and McLennan Compa... (NYSE:MMC)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024