Pandemic wreaking havoc on traditional banking structure and practices

PwC expects major credit problems on all fronts to cause years of turmoil among banks, credit unions and fintechs. Interest rate pressures, new regulatory strictures and the urgent need to bring back forgotten expertise will help drive a major revamp of what the industry looks like, and is. 'Platformication' could turn out to be a winning strategy.

The Great Recession came about in some ways because of mistakes made by financial institutions. The resulting damage and ongoing recovery remade many aspects of the industry, created a huge cleanup and a concurrent compliance flood. And it also helped create an opportunity for fintechs to take root and bring fresh ideas to financial challenges while traditional institutions were otherwise occupied.

That recession was a catalyst, and now it’s happening again, for different reasons.

By contrast to the Great Recession, the COVID Recession and the pandemic and lockdowns that drove it, had almost nothing to do with financial institutions’ own previous actions. Quite the contrary. They helped keep financial services and parts of the economy on an even keel.

Nevertheless, traditional financial institutions have been looking at the beginnings of a major series of changes in the way they operate — potentially even their very existence, at least in familiar form.

 

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