Financial Institutions

The financial sector is undergoing a process of profound transformation driven by at least three major factors: the macroeconomic environment, regulation and supervision, and digital transformation, all of them having a direct impact on banks’ profitability: reduced margins, pressure on costs and a lower ROE. According to the EBA, 30% of European financial institutions expect to make changes to their business models as a result of these factors.

In global terms, the current macroeconomic situation is characterized by moderate growth in a scenario of low inflation and low interest rates, although with a trend of falling unemployment and default rates, which in the short term has made it possible to maintain asset prices and reinvigorate risk appetite, but over the medium term reduces banking business profitability and makes it more vulnerable.

As for the regulatory and supervisory context, requirements are increasingly more numerous, more demanding and affect more areas (capital, provisions, balance sheet structure, liquidity, leverage, etc.) leading to a system that is overall more secure and solvent, but which structurally reduces the profitability of banks. The direct costs of adapting to these requirements are proving be very significant for banks, reaching $2,000 million a year for the largest financial institutions. But the expectation is for a degree of stability over the medium term, as the process of regulatory and supervisory transformation gradually concludes.

In relation to digital transformation, there is an unprecedented technological revolution with a profound impact on the business model of organizations. This transformation can be summarized as three changes: an exponential increase in data volume as well as in storage, processing and modeling capabilities, with lower associated costs; a change in customer behavior towards a more digital and informed profile; and the emergence of new competitors heavily leveraged in technology.

Financial institutions are responding to these challenges by transforming themselves in at least four areas: business models, transformation and efficiency, finance, and risk management.

Our practice

Management Solutions caters for all kind of entities within this market: banks, insurers, investment companies, financial institutions, etc.

Based on their in-depth knowledge of, and experience in, the industry, our professionals are more than prepared to meet any current challenge.

All our areas of specialty can be brought into play in this practice. Additionally, we have developed certain services that address industry-specific requirements. Especially noteworthy are our services in wholesale banking (Treasury, Capital Markets, Asset Management, Payment Methods, etc.), business and retail banking (distribution models, knowledge of customer, customer’s multi-channel behavior and experience, etc.), management of financial business risks (in any of its facets), optimization of equity, and regulatory compliance (Basel II, money laundering, etc.).

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