Profitability remains the core problem of European banks; consistent digitization a success factor

A decade after the global financial crisis, Europe’s top 50 banks are still struggling to regain long-term, sustainable profitability. Looking forward, the outlook is still more troubling.

For our latest annual European Banking Study, we have used zeb’s tried-and-tested, proprietary simulation model to forecast the financial performance and capital resilience of Europe’s top 50 banks over the next five years. Even in the most optimistic and least probable “Euroboom” scenario, banks will fail to meet investor expectations for RoE or accumulate sufficient capital reserves.

Last year, we identified four pathways to profitability that Europe’s banks could follow: M&A, product specialization, breaking up the value chain, and developing “beyond banking” ecosystems. We highlighted digitalization as the major enabler for all four pathways.

Building on this finding, we now examine whether digitalization could be the key to survival and long-term profitability for Europe’s stagnating banks. The results of our in-depth analysis are striking and lead to a point, where our study delivers more hopeful news. The European Banking Study 2019 (#EBS19) analyses how digitalization could be the “silver bullet” that delivers long term profits.

Now in its sixth year, zeb’s annual European Banking Study has established itself as the leading industry research source for the region’s top 50 banks and an indispensable guide to how they can navigate the challenges ahead.