As we look ahead to 2019, the banking industry could be excused for trying to catch its breath.
A decade on from the financial crisis, the path forward still remains fraught with difficulties.
Return on equity remains stubbornly low across the board, while cost-income ratios remain high.
This year will clearly be defined through the prism of Brexit, and the sector will continue to work to serve customers, regardless of what the next few months bring.
It’s already a notable year for UK banking, as 1 January saw the official start of the UK ring-fencing regime, which is part of the post-crisis move to prevent contagion from investment banking activity.
And it will continue to be a busy year, whatever happens with Brexit.
One of the most high-profile issues for the sector to grapple with is resilience and operational continuity.
The Treasury select committee announced its inquiry into bank IT failures in November, and the financial services regulators have also made clear how critical operational resilience is.
This year will see banks deal with an ever more complex set of internal challenges, as they look to digitise legacy technology while facing severe cost pressures.
At the same time, competition from tech firms and increased cyber threats are all adding to their woes. Operational resilience is crucial in helping the City remain a global financial centre.
The good news is that the bank boards fully understand the reputational and financial damage that technology failures will inflict.
And despite these challenges, I expect adoption of technology to continue to move at a rapid pace.
More banks are increasingly certain of their move to the cloud, attracted by the potential of using data in real-time to transform their businesses and the cost savings involved.
Artificial intelligence is still in the early stage of its potential, and we can expect this to drive revenue, risk-management, and customer experience in the future.
Open Banking has yet to take off in the way that many predicted, but 2019 should see challengers, fintechs, and the large banks continue to invest in their customer offerings.
Banks will also be dealing with continuing regulatory change. For example, on the retail side they will have to reassess their pricing structure in response to the Financial Conduct Authority’s changes to overdraft pricing, which are due to take effect in December 2019.
On the commercial and investment bank agenda, the requirement to reduce reliance on Libor and move to alternative reference rates will increasingly occupy minds.
Banks will have to rework models and update systems to offer products on the new rates and manage the risk on legacy positions. Though the timeline to transition away from Libor is the end of 2021, the regulator will expect to see evidence of progress much sooner.
Given the diversity of these challenges, the industry will be working flat-out to ensure that it keeps up with expectations from customers, regulators, politicians, and investors. By the end of the year, the finance sector could be excused another rest.