Banking and capital markets 2020: Is your business equipped with a tax function for the future?

Banking and capital markets: Assessing the current state of tax

The global tax landscape and the banking and capital markets industry are both in a state of rapid and constant change primarily as a result of a more global and technologically-advanced world. These changes directly impact the function and expectation of a tax department. Is your business equipped to handle the challenges of 2020? If not, does your tax department know what it needs to do in order to optimise its function in 2020?

Our report identifies the following three steps to help tax departments take action now and be prepared for the year 2020 and beyond:

  • Step one: Assess the current state of the tax department
  • Step two: Develop the future state of the tax department
  • Step three: Develop a transformation roadmap

“According to PwC’s 18th Annual
CEO, 89% of BCM CEOs are
concerned with over-regulation,
up from 80% in the prior year.”


Banking and capital markets priorities evaluated through a tax lens

Our report identifies six priorities banking and capital market organisations should consider:

  1. Proactively manage risk, regulation and capital
    Managing tax risk has always been a challenge and a goal for every business, but as risk management in general continues to be a high priority, so does the management of tax risk.
  2. Establish stronger culture and conduct 
    In PwC’s Capital Markets 2020 survey, 90% of respondents believe that it is important to establish a strong conduct and culture focused on higher ethical standards.
  3. Redefine the business model 
    The industry still isn’t sure what the future holds in a post-financial crisis world. It is still finding its new equilibrium.
  4. Strategically renew the operating model 
    IT automation, consolidation and utilisation of middle office and back office activities will simplify operating models, reduce costs and improve profitability.
  5. Enable innovations, and the capabilities to foster it 
    PwC’s Global Innovation Survey reveals that financial services falls well below other industries in its ability to manage innovation effectively.
  6. Obtain an information advantage 
    By harnessing the power of big data, leaders will be able to create competitive advantages in client experience, operational design, risk management and profitability.

Looking at the role of the tax function in 2020

We know the business and operating model for banking and capital markets companies has changed and will continue to change – both as a need in response to the unintended and unforeseen aftermath of the financial crisis and also out of desire to embrace the innovation enabled by technology. In all aspects the tax department has to reflect and embrace the evolution of the business, while also incorporating tax specific developments. As similar drivers lead to change to both the business and the tax landscape more directly, the tax function may feel the impact of change with double the force.

The needs and role of the tax function today are vastly different than what they will be in 2020. We expect the tax function to shift from a primarily-labor intensive reporting and compliance function to a key enabler of a company’s strategy. Each company will have its own process, transformation roadmap, and future state but we believe common themes will exist.

Contact us

Kevin Burrowes
Global Banking and Capital Markets Leader,
Tel: +44 (0) 20 7213 1395

Joseph Foy
US Private Equity Tax Leader
Tel: +1 (646) 471 8628

Follow us