06Jun

Investment banks are having a strong year.

After taking belt-tightening steps last year and announcing cost reduction plans this year, the coronavirus pandemic and subsequent business shutdowns worried the industry that more draconian action might be coming.

That prospect now is much less likely. Most investment banks had a strong 1st quarter and are on track for an equally good Q2.

Reporting on positive financial news from three of the largest global banks, eFinancialCareers predicted that as long as conditions continue to improve “banks may indeed put their heads above the parapet and start tentatively implementing hiring plans later this summer.”

Writer Sarah Butcher’s optimistic prediction follows reports last month at Bernstein’s 36th Annual Strategic Decisions Conference and Deutsche Bank’s Global Financial Services Conference that banks are seeing good, even strong earnings performance.

Jamie Dimon, chairman and CEO of JP Morgan Chase said the firm’s Q2 trading returns are as strong as they were in the first quarter when they were up 32% over Q1 last year.

The eFinancialCareers report also said Deutsche Bank’s CEO Christian Sewing said sales and trading revenues were continuing to show the same strength in April and May as in Q1 when they were up 13%.

Goldman Sachs, which saw its Q1 net earnings up 89%, said it was meeting the expectations set out in January and had no plans to do more belt-tightening than it originally announced.

“Despite everything,” said eFinancialCareers, “ 2020 is turning out to be an OK year for investment banks.”

Photo by MayoFi on Unsplash

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Green Key
Jun 6, 2023

Banking Trends That Are Here to Stay

More than ever, customers are turning to online banking to pay bills, transfer funds, and handle transactions they would have visited a branch for just a few months ago.

Baby Boomers, the generation most reluctant to have downloaded their bank’s mobile app, have embraced online banking in record numbers. Shortly after businesses were ordered closed, The Senior List found 77% of older Americans had conducted a financial transaction online.

This embrace of mobile banking is one of the banking trends that is here to stay, says an article in Forbes.

“It’s not just Boomers who are swiping right on online banking,” says Forbes. Citing a Boston Consulting Group survey conducted in June, the article notes that in the first three months of the pandemic 44% of 18-34 year olds enrolled for the first time in online or mobile banking.

Overall, Fidelity National Information Services, a service provider to the banking industry, reported new mobile banking registrations increased by 200%, and mobile banking traffic increased 85%.

“Once customers experience the convenience of mobile, they very well may never go back to traditional banking,” the Forbes article says. The Boston Group found a quarter of the new remote banking users claim they will visit bank branches less frequently in the future or not at all.

While e-commerce has exploded during the pandemic, banks have taken steps to streamline the payment process in brick and mortar stores. Forbes says some banks upgraded physical debit and credit cards to enable tap to pay. “Consumer usage of platforms like Apple Pay and retailer deployment of embedded contactless payment terminals like Square has also reached unprecedented levels,” the article reports.

In one area that before COVID hadn’t attained much traction, fintech startups and the industry generally have seen a spurt in demand for money management tools. Though 75% of respondents to a survey reported never using a personal finance app, since the pandemic 16% have. Here, it’s Gen Z and Boomers that are more aggressively turning to these services. A SYKES survey reported 23% of Gen Z and 18% of Boomers said they were new users to personal finance and budget apps.

“Fintech is an ever-evolving landscape — and it’s one that the pandemic has sent shock waves rippling throughout,” says Forbes, which concludes on this note: “Thanks to fundamental shifts in the way consumers perceive and depend upon digital finance tools today, these fintech trends just may stick around long after people have holstered their hand sanitizer.”

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Green Key
Jun 6, 2023

COVID Is Accelerating the CFO Evolution

Chief Financial Officers have been playing an ever greater role in business management and strategy since the title was first used in the 1960s.

The evolution of CFO from keeper of the records and reporter of numbers to strategist has been underway for years, accelerated by the Great Recession and now the COVID-19 pandemic.

A report on this evolution says the pandemic has expanded the role of CFOs as businesses struggle to maintain their equilibrium in the face of unprecedented changes. While CFOs believe their role is growing in significance, CEOs are even more certain.

The survey that forms a key part of the report by the Institute of Management Accountants and the Association of Chartered Certified Accountants found 72% of financial managers at all levels saying the CFO role will “increase or increase significantly” over the next few years. 82% of CEOs see that happening.

The pandemic, the survey respondents said, has had an impact on that evolution and on how it has altered their view of the role. Curiously, CFOs themselves see the effect as more modest compared to CEOs. Where just over a quarter of CFOs perceived the impact of COVID as changing their views of the CFO role completely or significantly, over 50% of CEOs said that.

Indeed, the survey participants said that for CEOs, leadership, strategic insight and ethics and trust are the most valued characteristics of CFOs. While the CFO respondents agreed these with the CEOs, they didn’t score them as high.They also saw characteristics such as customer centricity and global experience as much more valuable than did the CEOs.

In discussing the report with AccountingToday, IMA Vice President of Research and Policy Raef Lawson said that the survey and multiple roundtables with business leaders bears out the predictions made a decade ago about the changing role of financial leaders.

“We had predicted that the role of the CFO would be transitioning from financial reporting and stewardship to more of the strategic business partnership role, more engaged through external stakeholders. That’s all taken place. The interesting thing is that the pandemic seems to have just accelerated this change.”CFO of the Future chart.jpg

Photo by Tyler Franta on Unsplash

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Green Key