The Latest Headlines From Across The Banking Sector - February

2022-03-11 |  Ben Dineen

In a month that started with the suggestion that companies help to tackle rising inflation by showing restraint over pay rises, it was followed by impressive year end results for a majority of organisations in the sector. We take a look at what this means and put a lens on Digital Transformation.

A profitable year

  • The year end results have seen huge returns across the sector – Barclays, Lloyds, Santander, HSBC and NatWest showed a significant boost in profits.
  • The rapid recovery from the pandemic driving up the demand for credit and credit provisions that had been set aside from bad debt were significant contributors.
  • While at the same time, the record low mortgage rates saw a huge amount of activity in the sector last year resulting in a surge in mortgage books.
  • And with the rise in the BoE base rate to 0.5% to tackle rising inflation, expect banks’ net interest margins to increase in the year ahead.
  • These results mark an era of growth, with a few signals supporting this… one being the return of significant bonuses
  • This is also leading to a more fierce market for talent,  organisations will have to continue to reward staff and consider new ways to ensure they are able to attract and retain staff.
  • Furthermore we expect it lead to a ramping up in investment into improving digital infrastructure...

Accelerating Digital Transformation

  • The COVID-19 crisis forced banks and their customers to accelerate their digital transformation, with more consumers embracing online banking and digital payments because of branch closures and hygiene concerns with cash. With the pandemic entering its endgame, banks shouldn’t slow down their move to digital
  • Lloyds banking group recently announced a £1 billion, three-year digitisation strategy to modernise their infrastructure and self-service capabilities, along with TSB overhauling their onboarding journey to reduce account opening time to 10 minutes
  • A recent article suggests that many banks aren’t as far into their digital transformation as they may think, but are deploying new tools for yesterday’s industry and as a result are not preparing themselves adequately for the future
  • If they haven’t done so already, Banks need to ensure that digital transformation is part of their long-term strategy, focus on customer experience, replacing legacy systems and opportunities for Artificial Intelligence and RPA, as it is a fundamental step in boosting their profitability. 

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