Whether you favour McKinsey or BCG, their proposals are easier said than done, particularly on the revenue front. With the global - and Australian - economy still weak, businesses remain nervous.
Senior executives in both banking and non-banking worry interest rate cuts, designed to stimulate business and household spending, are instead spooking people.
There are technical economic debates too which play into this. Reserve Bank of Australia governor Philip Lowe believes business has not accepted we are in a lower inflation, lower interest rate world and the hurdle rates of return expected on investments should be lower.
If business starts to agree then suddenly the opportunity for investment would be bigger - and so too hope for the economy.
Lowe sketched out his thinking on why this wasn’t happening in a recent speech.
Looking for reasons why hurdle rates hadn’t come down - and investment gone up - he said “the first is that the reduction in the cost of borrowing has been offset by a rise in the required risk premium due to the uncertainties that I spoke about”.
“If this were so, the hurdle rate would be unchanged, with lower interest rates just compensating for the riskier environment,” he said.
“The second possibility is that some firms have been slow to adjust to the new reality of low interest rates. We hear reports that a hurdle rate of return of 13 to 14 per cent has been hard-wired into the corporate culture in some companies. Changing this hard-wiring is difficult and time consuming.
“However, from our liaison with Australian companies, we do know that some companies have lowered their hurdle rates and this is opening up new opportunities for them. It would be good to hear more such reports.”
As a true economist, Lowe offered two hands: “My view is that there is an element of truth to both explanations: risk premiums have gone up and, in some cases, hurdle rates of return are too sticky.”
ANZ CEO Shayne Elliott echoed Lowe at the annual result presentation, saying ANZ believed its cost of capital and fallen from around 10 per cent to 8.5. The bank is doing more work on this but is also - reflecting the role of banks as hand-maidens to industry - discussing the implications with customers.
The response of the business community to this new, lower cost, lower risk world is cautious - particularly from those businesses investing in assets with multi-decade return profiles.
Yet property developer Dexus reviewed its last decade of investment decisions and found it should have actually invested in every opportunity that was presented. With the benefit of hindsight, the investment hurdles were too high.
Even if this new paradigm plays out however the impact on bank revenues - through more lending for investment - would not be shattering. And will take some years to play through.
In the meantime, the evidence of this latest reporting season is indeed the outlook is challenging.
Andrew Cornell is Managing Editor of bluenotes