Banks are at a make-or-break moment.
The pandemic was the ultimate gut punch, testing banks’ resilience in unforeseen ways. Yet, they are emerging stronger. And they now have a newfound conviction: They can overcome almost any challenge that comes their way.
But how can they channel this new energy to scale greater heights?
Before embarking on this journey, banks should take account of the tectonic shifts reconfiguring the global financial system: phenomenal growth in digitization, convergence of industries, fusion of technologies, proliferation of increasingly intertwined ecosystems, and the blurring of product constructs.
Look no further than the explosive digital assets market. The new financial architecture created by digital assets will have profound consequences for banks by revolutionizing how money is created, transferred, stored, and owned.
Simultaneously, powerful undercurrents are forcing banking leaders to reckon with the never-before-seen challenge of redefining the workplace and how work is done. To complicate matters, they are grappling with several upheavals in the workforce, not least of which is the escalating war for talent. Employees, for the first time in decades, appear to have the upper hand, especially in sought-after positions.
Meanwhile, even though digital transformation is going ahead at full speed, these efforts tend to be incremental, localized, and fragmented, resulting in a pervasive and pernicious “technology trap.” This is preventing many banks from realizing the full potential of their investments.
Bank executives also have a clear opportunity to lead the creation of an authentic, differentiated identity that embeds higher purpose. In addition, many banks have yet to turn their commitments to environmental, social, and governance (ESG) concerns into concrete action. They can alter the trajectory of climate change by taking the lead in climate finance innovation, something sorely needed to help transition companies, industries, and countries to a net-zero world. And then, there are gender and racial inequities, and gaps in financial inclusion where there is an opportunity for the industry to continue to step up to support the communities they operate in.
Certainly, there are many other hurdles to overcome.
But the window for decisive action is closing soon. Now, more than ever, banks should be bold and aggressive in orchestrating change at the pace and scale that will drive results.
This report analyzes various challenges and opportunities facing banks, as shown in figure 1.
We hope you feel inspired and emboldened to take action to ensure that institutions can thrive in the new, exciting financial system of tomorrow.
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