European Banking Study 2019

In “Weathering the perfect storm”, the sixth edition of our European Banking Study, our comprehensive look at the banking business in 2019 reveals that Europe’s leading banks – despite some undeniable improvements – still do not generate enough profit from their core banking services on average.

This has been a consistent finding since we started our study six years ago. However, there are of course also very successful banks in the market. Especially some mid-sized, less complex institutions focused on specific customers, products or regions, are ahead of the pack.

Using zeb’s proprietary simulation model to look into the future, we found that the industry’s essential overall problems are even likely to worsen. All our scenarios paint a troubling picture for an industry facing what could be a perfect storm of adverse economic and regulatory forces in the coming years. If we assume constant interest rates, market conditions from the end of 2018 and no changes to bank’s business / operating models, the average return on equity of Europe’s top 50 banks will halve by 2023. Even our most optimistic – and least likely – “Euroboom” scenario indicates that, on average, banks will only just meet investors’ profitability expectations.

How can Europe’s banks avoid sinking further into stagnation? This latest edition of the European Banking Study reveals if and how digitalisation – obviously the hottest topic across the whole industry – could be the “silver bullet” that delivers long-term profits and leads banks into the Promised Land. We have been able to come up with significant answers:

Banks that are digitalisation “pioneers” outperform less digitalised peers according to every significant banking KPI;
The most profitable banks replicate five success factors found in global Tech Giants like Google and Amazon to a greater extent than less successful banks;
However, the “silver bullet” of digitalisation will only work for banks that understand how to pull the trigger.

To learn more and obtain a copy of the EBS, please visit the European Banking Study 2019 or contact the Stockholm office directly.

Steffen Jung