The banking sector showed its most vulnerable face during the 2008 recession. Strict regulations and measures enacted soon after the crisis has been keeping banks on their toes. However, it has not been an easy ride for the sector. Are regulations enough to keep banks afloat? Will they survive another crisis?
Experts worldwide are embroiled in discussions over the state of banks. Questions are being asked about the viability of traditional, current, or futuristic models of banking. Recently, I attended the ‘The Future of Banking’ event, organized by the Young Fabians Society at Houses of Parliament in London. Speakers Professor Anastasia Nesvetailova and Marloes Nicholls discussed whether the sector has learnt the lessons from the 2008 crash and how the future could look. In this blog post, I am summarizing the most important takeaways from the event.
In her talk, Professor Anastasia Nesvetailova1 defined three visions for the developments in the banking sector.
Speaker Marloes Nicholls2 talked about the main banking tensions that affect banks in the UK. They are struggling with diversity and competition, long-term needs, low financial engagement, and a need for public policy, among others. The country’s low financial literacy is not helping the situation. Marloes recommends three solutions to remedy the UK banking sector: a) Serving the real economy and working closely with policymakers, b) Banking for the long-term delivering long-term value, and c) Respecting customers – creating a public process involving customers, civil sources, and regulators. The most important aspect remains that technology be applied effectively for the enhancement of the sector.
Given the fact that technology does what it does – it evolves – banks inevitably will need to follow suit. The amount of continuous transformation that is required in the banking industry is truly herculean. Embracing innovation and new technologies is the only and desired hygiene factor for banks.
1 Anastasia Nesvetailova – Professor, Labour Party’s Economic Advisory Committee member and Director of City’s Political Economy Research Centre.
2 Marloes Nicholls – Programme Manager, Finance, at Meteos; Director of the Money Comms Lab; and Project Manager and lead researcher at BankingFutures.