Eurogroup Consulting is proud to produce their CIB Outlook 2018. In this era of digital transformation and an evolving CIB landscape, our report focuses on how European CIBs can cope with both conforming to numerous regulations and bridging the profitability gap with US CIBs going forward.
The CIB landscape is evolving rapidly and we are well into an era of digital transformation. Whilst European CIBs are back on the growth track, US institutions are still more advanced in terms of restructuring programs and have been focusing on topline strategies for years now.
How will European CIBs survive and bridge the profitability gap with US CIBs whilst conforming to numerous regulations?
Our findings show that:
Large legacy European corporate banks must capture available client and product axis opportunities in order to grow. This means that they need to make deliberate choices on where to play and how to win, in areas that they can build a distinct competitive advantage. The right solution could be a combination of both alternative financing providers and legacy banks working collaboratively going forward.
Digital will give birth to a new generation of banker. The ‘Augmented Banker’, i.e. a banker that will spend less time doing repetitive tasks and will be able to perform new tasks. But from the wishful thinking of having a fully-fledged digital strategy to the concrete reality of execution is a gap that European CIBs need to bridge.
The Augmented Banker will drive organizational transformation using agile and innovative approaches to experiment, co-create and scale digital initiatives. To achieve this, CIB Human Resources departments will have to secure the appropriate skills and foster engagement among employees, while the CIO focusses on upgrading IT systems and enhancing analytics capabilities and people.
We spoke to a number of senior CIB executives who agree that, to address these challenges, European CIBs will need to focus on their strategic plays, digitalization and building resilience. Our study proposes the following key actions to confront this competitive landscape:
- Fully embrace digitalization, like their US peers. Digital initiatives will only be successful by aligning their strategy to the scale of disruption and maturity, adopting new business models and embedding digital culture awareness
- Bridge the gap and develop the new generation of the augmented banker – a banker with a digital mindset and skillet
- Decide where they want to play and how to win, grasping product and client axis opportunities for growth
- Build resilience with a high level of agility, client centricity and efficiency
Our study encompasses thorough qualitative and quantitative work, as well as secondary research. The CIB Outlook 2018 provides clear evidence that change in the European CIB industry is imperative, but that the current barriers can be overcome with a significant focus on strategy, digital and resilience. We hope that this study provides valuable insights and stimulates action within your company.