What should banks be reading? Part one: strategy

However, with the FT’s 600-strong editorial team publishing round-the-clock news and insight, it can be difficult to keep on top of everything as it’s written. What therefore are the fundamental topics that all banks should be paying attention to on FT.com?

This post is the first of a three-part series, ‘What should banks be reading?’. In part one we focus on strategy and identify some of the recent must-read content from FT journalists about a range of key strategic themes for banks in 2021.

The pandemic’s long-term implications on banks remain unclear, but as the picture continues to develop and unfold, FT journalists have identified not just the challenges banks are facing, but also the emerging opportunities.

US banking editor Laura Noonan explains how the top banks in the US have been able to lower their costs, as the pandemic increased customers’ willingness to use digital services. Paris correspondent David Keohane reported on a similar trend in France (where the Lex team highlights that consumers tend to “prefer the personal touch”), as Société Générale announced they were closing 600 branches and cutting €450m in costs as business moved online.

While the rapid move to digital banking brought about by Covid-19 would have seemingly played into the hands of fintechs, FT Alphaville’s Jemima Kelly writes that many have struggled to prove they’re as reliable as the big banks in a time of crisis. How will traditional banks now capitalise on the trust they’ve re-built with customers during the pandemic?

In the first major test for the sector since the 2007 financial crisis, the pandemic has highlighted fundamental issues for some institutions, while others have looked to capitalise. The value of scale has become particularly apparent, as lenders struggle to turn their inflated deposits into higher returns. The FT’s Laura Noonan and Robert Armstrong explain how the pressures of the pandemic look set to open up a wave of consolidation in US banking, and identify some of the likely buyers and sellers.

The FT’s European banking correspondent, Owen Walker painted a similar picture on the continent, where the average deal size reached levels not seen since 2008, as policymakers have sought to facilitate consolidation in order to help banks leverage greater economies of scale. Guest writer and former chief operating officer of Barclays, Jerry del Missier presented an alternative view that European banks should instead be focused on cutting costs.

In the UK, the Lex team writes that consolidation among the lesser challenger banks is badly needed, but regulatory hurdles and difficulties with systems integration may be unappealing to outside private investors. Post-Covid, can banks still achieve greater market share by going it alone?

When the banking and finance sector was largely left out of the UK’s post-Brexit trade deal with the EU, anxieties around London’s future as a leading financial centre deepened. While the FT’s editorial board highlighted that the shift in EU share trading to Amsterdam could be a sign of things to come, several FT commentators pointed out that banking employment in London was yet to feel the big hit that had been predicted.

European economics commentator Martin Sandbu attributes this to the fragmented nature of the banking system across Europe, and makes the case for a unified single market for finance. Will London therefore remain Europe’s top financial centre until the EU goes back to the drawing board?

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