Financial Institutions

The global corona pandemic will lead to high loan defaults due to the subsequent insolvencies in the real economy. This will have a particularly negative impact on banks’ profitability. The return on equity, which averaged 8.9 percent in 2019, could fall to 1.5 percent by 2021. In the medium as well as in the bad economic scenario, the return on equity of both North American and European institutions would slide into negative territory.

These prospects require measures to increase productivity and, of course, massive cost savings. There is potential for optimization in particular when it comes to adapting the branch networks through digitization and through the retraining and realignment of staff for new business areas. The outsourcing of certain functions to external service providers must also always be considered. Overcapacities in central areas must be reduced. In addition, the trend towards home office brings with it a possible adaptation of existing real estate space, as this should reduce the need for office space in the future.

Furthermore, the currently very high levels of customer deposits must be transferred to higher-fee products and the pricing of selected services must be adjusted.

Our experienced and committed consultants will be happy to support and accompany you in this process, both in the operational as well as in the strategic initiation and implementation of measures towards the future viability of this industry.