Nomis Solutions, leading global pricing and profitability technology provider for the financial services sector, conducted a perception audit of deposits and lending managers from Europe’s leading banks. The survey, released gauges overall sentiment in the industry and delves into what today’s banks perceives as their principle challenges.
Over 50% of the banks surveyed now see regulation and profitability as their main challenge. This is a complete contrast to pre-crisis surveys.
50% of banks surveyed did not consider themselves highly or very prepared for Basel III regulation.
77% of banks are not highly prepared for any form of central bank base-rate increase.
The respondents, who represent more than 20 banking institutions across Europe, were asked about their views on the current state of the industry and their predictions regarding its future. The predictions reveal insights into savings and deposits, mortgages, and personal lending.
Both lending and deposits managers highlight regulation as their main immediate challenge, putting it ahead of profitability and competition. This marks a complete change from pre-crisis surveys and confirms what the industry has begun to assume—that satisfying regulation is now the industry’s key focus.
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Another revealing result is that only 23% of the respondents regard themselves as highly prepared for any form of central bank base-rate increase. This suggests that across deposits and lending, although banks are working towards being prepared for future rate increases, the pace of preparation and change needs to accelerate over the next 12 months. However, 50% of those surveyed did not consider themselves highly or very prepared for incoming Basel III regulation.
Damian Young, Director of Banking Services EMEA at Nomis, says of the results:
“The purpose of this perception audit was to benchmark relative preparedness for change across the banking sector. The responses show an eye-opening shift in priorities and a varying degree of preparedness for imminent challenges. Without a focussed acceleration of change, banks will find themselves unprepared for rate increases and incoming regulations such as Basel III—potentially the most significant piece of banking regulation in history.”