"Optimizing Revenues and Costs across the Bank"
How Banks can harmonize and effectively build their Profitability Management
Banks have faced many challenges in recent years. Topics like the ongoing low-interest phase, strict regulatory requirements at European and national level, new, innovative competitors like direct banks and FinTechs as well as the advancing digitalization, are keeping the whole industry on its toes.
Accordingly, the consequences for banks include consistently falling revenues, e.g. due to eroding interest margins in client business, lower credit and deposit volumes as well as low structural contributions from maturity transformation. At the same time, these negative developments in revenues are accompanied by rising transformation costs in banks, e.g. triggered by high investments in digital products, innovative customer platforms and to meet regulatory standards. An integrated profitability management offers banks the much needed tools to successfully master the demanding tensions between falling revenues and increasing costs. As a result, income and value contributions of individual business areas and products can be compared on a cost basis, thereby creating the necessary transparency to derive the right impulses for management.
Dr. Kolter, J. / Dr. Schindera, F.
Published in: White Paper, 2021