Global Banks to Enter Critical Two-Year Period During Which Focusing on Customers, Technology and Growth Will Be Essential

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Ernst & Young releases first global banking industry outlook.

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Banks face a near-perfect storm of challenges, including the rising cost of doing business and lower return on equity (ROE) expectations.

Global markets have started 2012 on a more positive trajectory, but the sustainability of this run remains the biggest question for banks worldwide. Macroeconomic pressures and regulatory uncertainty are squeezing bank profitability, highlighting the fact that the next 18 to 24 months will likely be the most challenging environment banks have had to face since 2008/2009. According to Ernst & Young’s global banking outlook, Making the right moves: Global banking outlook 2012-13, finding the right path to growth requires a combination of overcoming short-term obstacles and long-term planning.

As bank executives begin to chart their path for growth, the outlook identifies strategies for banks to potentially consider as they continue to navigate a volatile and uncertain global marketplace.

"Banks face a near-perfect storm of challenges, including the rising cost of doing business and lower return on equity (ROE) expectations. But, at the same time, they need to develop and implement new operating models and restore investor confidence," said Steven Lewis, Ernst & Young Director, Global Banking and Capital Markets and author of the outlook. "Banks may be tempted to watch and wait, but that will be a mistake given the rate of recovery varies significantly across industry sectors and geographies."

Steven emphasizes three areas worth investing in to seize opportunities for growth:

1. Renewing focus on the right customers and developing a "whole-customer" view to increase share-of-wallet with current clients;

2. Conducting a thorough review of products, services and markets to define the institution’s core business, and develop new business and operating models; and

3. Deploying technology to aide and differentiate product delivery, improve customer management and strengthen regulatory compliance.

In a video series titled "Top 10 global banking trends" that launched in conjunction with the global banking outlook, Steven added, "The playing field for banks is far from level. As the global banking landscape is redefined, those able to invest will find select opportunities to grow. At the same time, others will become smaller and less complex, focusing on core strengths. In both cases, technology will become increasingly important as both an enabler and differentiator across every part of the organization.”

To download a copy of Ernst & Young's global banking outlook, click here.

About the Ernst & Young Banking & Capital Markets Center
In today’s globally competitive and highly regulated environment, managing risk effectively while satisfying an array of divergent stakeholders is a key goal of banks and securities firms. Ernst & Young’s Global Banking & Capital Markets Center brings together a worldwide team of professionals to help clients achieve their potential – a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify the implications and develop points of view on relevant industry issues. Ultimately it enables us to help clients meet their goals and compete more effectively. It’s how Ernst & Young makes a difference.

About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
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Clare Duffy
Ernst & Young
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