Achieving Profitability Through Strategic Steering

The European Central Bank (ECB) has published details of how it expects banks to manage the process of setting and executing their business strategy.  This brings some clarity to the long-standing question of how recent supervisory focus on business models – it is again one of the ECB's priorities for the year – will translate into action for banks, but in the process introduces an expectation that banks make significant investments in their capabilities in this area. 

The details were contained in a report on the ECB's thematic review on profitability and business models, which took place between 2016 and Q1 2018 and examined profitability drivers and business models of 90 Significant Institutions (banks) in the Single Supervisory Mechanism (SSM).  There are similarities between the findings from the ECB and the feedback banks in the UK have received about their strategy planning capabilities, including as tested by the Bank of England's biennial exploratory