Banks must reshape to survive compliance and technology crunches

KPMG and EY highlight Australia’s big four banks must balance ongoing compliance costs with continued spending in technology or face being left behind when it comes to innovation.

In their post FY18 analysis of Australian bank results, KPMG and EY point to several compliance and technology headwinds facing the sector and suggest cost discipline will be a major focus. It means more restructures and simplifications.

KPMG partner, banking strategy, Hessel Verbeek said not only have various compliance and remediation costs translated into higher cost-to-income ratios, “the majors’ investment spend in risk and compliance projects is also up strongly and in most cases investments on growth initiatives has decreased in a relative sense.”

“If this redirection of investment towards regulatory compliance continues over a protracted period of time and the majors are unable to maintain their historical levels of investment in digital and other competitive initiatives, it could impact on the level of innovation that Australian consumers and businesses are accustomed to from our banking industry. Trade-offs will inevitably need to be made,” Verbeek said.

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Source: Banks must reshape to survive compliance and technology crunches | Financial Standard