According to a new survey report from EY, majority of banks (60%) are investing in new customer facing technologies.

The EY Global Banking Outlook 2017 includes a survey of senior executives at almost 300 banks across Europe, the Americas, Africa and Asia-Pacific. It identified two priorities for growth in the sector: recruiting and retaining talent and investing in new customer-facing technology.

The report encourages banks to do less, streamlining operating models and partnering with Fintech, blockchain firms and other industry disruptors to deliver better services, and to be relentless in driving out costs and managing risks that help protect the organization.

“Distributed ledger technology could have a profound impact on the banking industry once issues related to scalability, resilience and security are resolved. While banks can start developing and testing applications in the near term, in the longer term they should be looking for opportunities to help build the public blockchain ecosystem by collaborating with large IT multinationals, participating in industry consortiums and teaming with traditional and non-traditional competitors”, the report said.

According to the survey, only 11% of banking executives expect their financial performance to improve significantly over the next 12 months. Managing reputational risk and meeting regulatory compliance and reporting standards were the two priorities for banks overall, which reflected the continuing need to balance risk management and building growth engine for the future.

"Banks realize that they cannot wait for a return to normalcy to achieve meaningful profitability. The industry must innovate to grow or optimize their business so they can be more efficient while also meeting the needs of regulators”, Dai Bedford, EY Global Banking & Capital Markets Advisory Leader, said.

The report outlines five specific areas that the banks need to improve inside their organizations:

1. Reshape – The banking industry will coalesce around four primary business models: local boutiques, global boutiques, regional champions and universal super banks. Banks must pick one and then restructure operations accordingly.
    
2. Control – Banks need to strengthen their three lines of defense risk management approach by improving efficiency, strengthening focus on vendor management and creating simpler supply chains.
    
3. Protect – Banks need to minimize internal and external threats by putting legacy issues in the past and demonstrating they have systems in place to prevent money laundering and financial crime. They also need to prepare for cyber attacks and future outages.
    
4. Optimize – The operating cost-to-asset ratio for banks has barely moved in the past five years. Banks need to shift to a forward-looking effort to embrace technology and drive "next-generation efficiency" in expense management to make progress.
    
5. Grow – Banks need to invest in staff and technology to support innovation to defend market share and work to ensure that they remain competitive as customers become more willing to use financial products offered by non-traditional partners.