Following my pondering on sustainable economic growth I turn to fintech partnerships.
One thing is quite striking when you look at the results of the big banks. While profitability may have rebounded, return on equity is generally stuck in single digits. That is below the cost of capital.
Asian banks are doing better in this regard than most. But what the figures highlight is the pressing need for new thinking on costs. While the global revenue pool has shrunk since the crisis, regulatory pressure has pushed up costs and forced banks to put up more capital.
I believe only radical moves to reshape back offices, and embrace what fintech partnerships can offer, can bring costs back into line. Distributed Ledger Technology (DLT) – or blockchain – could well have a role to play here.