Returning the bank to profitability
CROs debate how banks can differentiate themselves in the competitive landscape.
During the present unstable times, it’s imperative to know your customer really well, serve them, design products that do what they claim, and price them competitively – taking into account all the attendant risks while doing so, whether that is from cyber if you’re a digital neo bank or ‘green’ considerations if you’re a corporate bank. Climate risk is another market disruptor for consumer and corporate clients, depending if you’re assessing the insurance exposure of a house on a flood plain or an ESG rating for a company.
Remaining close to the customer is what is crucial. Do that and the risk appetite, price, and everything else will follow, including good profitability if you back it up with great customer service. A customer-centric approach is a vital necessity.
The existing focus on the fundamental need to look at the customer and assess risk does not change, whatever the present macro or micro induvial challenges might be.
Good product governance and lifecycle management are fundamental in ensuring you don’t store up trouble for the future,
“That involves good design, staff training and monitoring.”
Training and recruitment are especially pertinent in regard to the cyber risk facing banks as they and their customers increasingly go online and digitalisation advances. As a panellist said: “You need the same cyber skills inside your bank as those possessed by those outside the bank – if not better.” Stress testing of third parties and partners in the cloud is vital.
“A pure profitability measurement is a good place to start as the first line of defence,” said a panellist, as you cannot go wrong or lose money if a product has been designed, targeted and priced correctly at customers in the first place.
Aligning the risk and the profit is after all the crucial nexus for any bank. CROs were reminded to stay close to this fundamental truth during the present unstable times.
