Global Financial Services Market
Q1 2023: Survival of the fittest
After more than a decade of rather stable conditions in the global economy and stock markets, change and uncertainty have made a dramatic opening, and it seems they may take center stage for some time. If 2022 is any indication, industry experts have grown more concerned about what the remaining months of 2023 may bring to the financial services sector.
In 2022, several variables, such as geopolitical tensions, supply chain disruptions, a sharp increase in inflation, and layoffs, put the international economy under stress. Many of these disturbances are concentrated near or at the center of the financial services sector. Financial institutions need to fix fundamental flaws and find a method to stabilize ground, even as the world keeps changing, whether coping with shocks to the core or rippling effects.
Banking stability was put to the test in March 2023. Regional US banks Silicon Valley Bank (SVB) and Signature Bank of New York failed because of a sudden exodus of depositors. A week later, following a lack of market confidence, Swiss authorities announced a state supported merger of Credit Suisse with UBS. Since the global financial crisis, this was the first instance of a globally significant bank failing.
Apart from risks related to financial stress, there are other possible sources of macroeconomic risks that can have macro-financial implications, like, an escalation of geopolitical tensions or a sharp rebound in economic activity in China could spark a sharp rise in energy prices, pushing headline inflation higher again.