The effects of Covid-19 will continue to require investment, support and adaptation from the Financial Services industry around the world. Whilst falling interest rates, reduced consumer spending and increased risk are amongst the negative impacts felt by banks in the past year, the pandemic will also give rise to opportunities for digital transformation that truly helps customers and ensures business success.
Here Templeton & Partners provide the latest global and European market overview. The most recent research and projections from leading publications and institutions such as the International Monetary Fund (IMF), the European Central Bank, Bloomberg and Deloitte reveal expert insights into the coming years ahead.
Global Banking Overview – Effects of Covid-19 on Financial Services and Banking
- Global GDP Forecast – Although global GDP could still reach US$9.3trillion lower than expected a year ago, the global economy is projected to grow by 5.5% in 2021 and 4.2% in 2022. (International Monetary Fund)
- Medium-Term Impacts of Covid-19 – The most likely impacts to the Banking sector involve profitability and credit management, customer relationships, securitisation, operational resilience and stock market volatility (KPMG).
- Post-Pandemic Return – After banks were largely responsible for stabilising economies and delivering Government relief and stimulus efforts, the pandemic aftereffects will likely damage return on equity (ROE). The average ROE of the top 100 banks in North America, Europe and APAC could decline in 2021, with APAC banks potentially nearing 9.2% pre-pandemic ROE averages by 2022 and US banks recovering to 11% in 2022. Low rates will suppress net interest margins (NIMs), creating strong headwinds to interest income growth. (Deloitte)
- Risks – Key risks to monitor will include digital security, new EU regulations (and, in some countries, taxes) and the capacity of telecommunications infrastructure.
- Data – The wealth of customer data must be protected, managed and best utilised to remain compliant and understand and respond to rapidly changing customer trends.
- Rapid Consumer Behaviour Changes Driving FinTech – Digitalisation surged in popularity in Europe during the pandemic. Consumer and business patterns have and will continue to change rapidly due to national lockdowns, changing working patterns and lifestyles, and stability of consumer finances and disposable income. The global FinTech sector is projected to reach $500billion in annual revenues by 2030.
- Green Bonds Growth – After the 2015 Paris Climate Conference positioned finance at the heart of the climate change debate, G20 leaders committed to prioritising green finance initiatives. Central Banks are increasingly elevating their climate change response and global leaders have publicly committed to achieving net-zero carbon emissions in the next few decades. Green bonds are predicted to double in issue in 2021, marking a decade of consecutive growth. (European Central Bank).
Download our free Market Intelligence Report to discover:
- Global Banking Shift – How Africa and Asia are fast challenging Europe for banking industry growth prospects
- Brexit – How the UK’s departure from the EU will permanently reshape the European banking climate
- Market Leader Activity – Where and how the largest banks around the world are investing and ramping up growth plans for 2021 and beyond
- Digital Transformation – How FinTech and digitisation will impact Financial Services globally in the next five years.