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Nov 10, 2020

Consumer spending is not expected to recover measurably in the near term so banks now face a longer runway of diminished business activity and profits – where can you turn for help?

Are you getting the help you need?

With the US election, politics and COVID still dominating the headlines, banks and issuers continue to face huge challenges as they try to navigate back to some semblance of business normalcy, which still seems months away at best. A recent McKinsey report stated nearly 60% of banks aren’t generating returns on equity which could be cataclysmic if the current economic slowdown stays with us. 2021 budget and financial targets are being reviewed and revised, and many will have gaps to be filled to ensure performance. Critical issues are front and center as banks and businesses work to regain momentum.

  • Economic Activity – Nine months into the global pandemic and the outlook for the winter seems to be as dire as it appeared in the spring. The steady rise in virus cases world-wide has the risk to further hinder recovery with restrictions on various business types and additional lockdowns being considered. Economic activity – and especially consumer spending – are not expected to recover measurably in the near term, so no macro assistance coming soon.
  • Work Environments – While many of our clients had developed plans to cautiously begin moving employees back into workspaces at the end of the year and early in 2021, the resurgence in virus cases has acted like a huge “Pause” button.  As banks, issuers and their employees have heroically managed to create a new business as usual with the vast majority of staffers working remotely, this effort has been expensive on its own while the project and new initiative pipeline continues to be stressed.
  • Low Interest Rates – Central banks have supported the historically low interest rate environment, which has added to the financial misery for lenders of all types. Combine pinched return on assets with high deposit levels, thanks to consumer caution on spending, and lenders can’t generate the asset growth to help themselves.
  • Increased Investment in Technology – Most banks and issuers have doubled down on technology investments including mobile payments, increasing security items such as biometrics, integrating existing systems, converting old data to newer formats and more - all with the intent to meet increased regulatory and compliance requirements.  

Banks have certainly leveraged outside resources to assist with the technology investments. And those with the deepest pockets, have turned to some of the largest consulting companies to get help. In fact, Source Global Research recently commented regulatory consulting has become a huge part of their income mix.  But for most banks, this type of investment may be out of the question and left to internal employees to manage.

Questions

With banks and issuers facing a long runway of diminished business activity and profits – where can you turn for help to push long-planned but now delayed projects to the finish line?  

Can you afford to make those investments? Can you afford not to?  

In the meantime, what can you do to improve earnings now to drive even stronger performance as business activity picks up on the back end of the pandemic? What tactical opportunities can be easily and quickly executed, and more importantly, do you know what they are?

Get the Help You Need

At Profit Insight, we have spent the last several months working with clients to address these precise issues. We have provided additional analytic and project support to accelerate stalled projects and addressed leakage as well as operational and product issues which were hampering financial performance, through our proposed actionable and measurable solutions.

So, just two more questions: Why leverage our experience, and most importantly, why now?  

  • Your economic recovery is top of mind for us. We know you need quick results, sustainable earnings improvement with minimal customer impact – especially now, that's what we do.
  • Remote analysis, low touch, no interruptions – Our engagement approach allows your team to continue to focus on their critical work to support your clients and business.
  • No upfront fees or out of pocket expense – We know budgets are tight and performance has been impacted. Given the ongoing challenges posed by the pandemic, we are waiving upfront fees for firms who engage with us over the next three months.

We identify tactical opportunities you CAN implement promptly, and we will earn our compensation by sharing in your success. If your consulting partners aren’t stepping up to make an investment in your financial and operating performance – WE WILL!

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