A new SAS-sponsored study by Economist Impact predicts three potential futures for banking, examining the risks and opportunities ahead. Depending on the sequence of events that take place between now and 2035, any of the scenarios are conceivable. The objective of the study is to shed light on how banks might change their purpose and business strategies to benefit consumers, shareholders, communities, and the environment. The study makes it evident that the banks are at a turning point in dealing with issues like climate change, economic dispersion, and chronic economic and social injustices.

Yuxin Lin, Senior Manager of Policy and Insights at Economist Impact said, “The sector’s rapid evolution amidst prevailing uncertainty begs a fundamental question: What is the purpose of banks?”

How banking leaders answer this question – and the business decisions they make as a result – will redefine the entire industry.

Alex Kwiatkowski, Director of Global Financial Services at SAS said, “Banks have the power to elevate not just our global economy but all of humankind. By embracing technology and innovation with intention, banks can pave a more purpose-driven path, where higher purpose and profitability go hand-in-hand. And if they don’t embrace this fully, a golden opportunity to make a genuine difference will be squandered, potentially with very serious consequences.”

Scenario 1: Can transformed banks regain public trust?
Banks have had issues with their reputations ever since the 2008 financial crisis. According to the 2022 Edelman Trust Barometer, financial services presently inspire confidence in just over half (54%) of the general public, making them one of the least trustworthy industries. Flashing forward to 2035, Scenario 1 envisions a world where banks wield digital transformation to rehabilitate their image. Banks have backed consumer-focused regulation and improved safeguards against cybercrime and data privacy. More open banking and collaborations that spark profitable new offers are fueled by increased transparency and consumer protections, which boost public confidence. Every aspect of clients’ financial lives are seamlessly integrated via digital platforms in personalized, adaptable ways.

Stu Bradley, Senior Vice President of Fraud and Security Intelligence at SAS said, “Consumer trust, built over many years, can be lost in an instant. As digitization accelerates, it is critical that banks create hyper-personalized engagement as they address rising risks. In balancing customer experience and risk, an enterprise decisions approach – where fraud, risk and engagement decisions integrate holistically across the customer journey – can cut costs and streamline banks’ IT infrastructures, while boosting revenue and customer retention.”

Scenario 2: Might banks catalyze cross-industry climate action and power the green transition?
It will take unprecedented levels of global cooperation and teamwork to address the climate crisis. The United Nations claims that states’ present pledges to cut greenhouse gas emissions are far insufficient to keep global warming to 1.5°C over pre-industrial levels. Action that is swift and firm is necessary to prevent the worst effects of climate change. Scenario 2 foresees that in 2035, the world community will be committed to addressing climate change, and decolonization will be a top priority for infrastructure, transportation, and energy. Cities have been redesigned to be more resilient to the effects of the climate. Green technologies and affordable renewable energy sources are becoming the norm.

Troy Haines, Senior Vice President and Head of Risk Research and Quantitative Solutions at SAS said, “Climate leadership in the banking sector will drive greater cross-industry progress toward net-zero emissions by 2050 – and it starts now with better analytics, modelling and management of climate risk. In enhancing their ability to model climate risk scenarios and understand potential impacts to their balance sheets and capital, banks can help propel the green transition and advance worldwide climate resilience”.

Scenario 3: How will banks fare in a geopolitical fragmented world?
Economic and market uncertainty continues even as the world seeks to put the worst of COVID-19 in the rearview mirror. The pandemic’s aftermath has exacerbated rivalries among the world’s economic superpowers while overtaxing developing nations, whose citizens bear disproportionate burdens. Against this backdrop, it isn’t hard to imagine Scenario 3, which depicts a geopolitically contentious world stage in 2035, colored by divergent interests and a retreat of multilateralism among the world’s economic giants. The World Trade Organization has been displaced by bilateral and regional accords. The emergence of digital currencies and rivals’ alternative payment methods has shattered the global financial system.

Theodora Lau, Founder of Unconventional Ventures says, “Deglobalisation, accelerated by recent global events, will likely widen the staggering societal inequalities that plague us today. Indisputably, banking and money are at the heart of it all. Each of us has a role to play in championing a more inclusive and sustainable future with our actions of today”.

How fintech challenges banks
The use of personal finance applications has increased recently. The app game is being played by everyone in the banking industry; app providers range from banks that offer their own services to lone developers that make stand-alone saving, budgeting, or money management apps. It is anticipated that the use of personal finance applications will be at its peak in the coming future. These app providers offer current accounts that can only be handled from a phone or tablet, and staff members give customer support via a live chat service. The option to temporarily block your card from your app in the event of loss or theft is one of the major improvements offered by challenger banks with app-based business models. Instead of phoning customer support for replacements, clients can order a replacement with a few taps on the screen. The services offered by conventional banks might be improved with such straightforward changes. By allowing consumers to just take photos of their checks rather than bringing them into the branch, some traditional banks already assist their clients in this way.

Conventional banks are catching up
There are indications that major banks are adapting to the future of banking by becoming more digitally friendly. For instance, Hello bank! by BNP Paribas Fortis which operates in France, Belgium, and Germany was the first bank to exclusively handle accounts through an app. In keeping with a shifting consumer landscape, Hello Bank! offers assistance and support to its clients via a variety of social media platforms, including an online forum.

Additionally, a lot of these services make international banking simpler than before. The number of apps that assist users in managing their finances on a daily basis has increased in other places. Yolt, for instance, enables users to integrate all of their accounts and monitor them in a single app while also getting advice on their weekly or monthly budget. Standalone savings apps are becoming increasingly common, too. This includes applications that add the difference between the amount a user spends on each transaction and the nearest unit to their savings account. If customers are unable to afford to set aside hundreds of pounds or euros each month, such straightforward developments can give them a new, simple option to save money.

Open banking
Increased awareness of how banks communicate with (and inform) their customers is one of the long-term repercussions of the 2008 financial crisis. The European Union’s Payment Services Directive went into effect in 2018. The order upholds restrictions on how users can access their financial data. This is open banking, which gives banks a plethora of new ways to interact with customers and gives consumers a greater understanding of their money. Open banking basically implies that companies that offer online accounts (such as credit and savings cards) must allow their clients to securely exchange data (such as expenditure) with outside companies (such as budgeting applications), if the client so chooses.

Consumer education regarding the advantages of open banking still needs to be done in great detail. Furthermore, banks must appropriately embrace the various ways in which they might exploit these innovations. This suggests that the coming years could be significant for the banking industry’s future because several governments are now approving operating more open banking.

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WTO Director-General Roberto Azevêdo said: “I welcome Lithuania’s generosity. This support is vital for our work to help developing and least-developed countries increase their knowledge and understanding of trade issues to help them connect to global markets.”

Lithuania’s Vice-minister H.E. Mr Albinas Zananavičius said: “Lithuania is a strong believer in open, fair and inclusive international trade, which it sees as an important instrument for supporting economic growth and development, building social welfare and enabling companies of every size to find their place within the global trade network. We recognize the value of technical assistance and capacity building in countries acceding to the WTO as well as in those who are already WTO members. As a small and open economy, Lithuania attaches great importance to strengthening and deepening the understanding of multilateral trade rules, which in turn allows all WTO members to benefit from a more stable and predictable trade environment.”

Overall, Lithuania has donated approximately CHF 300,000 to WTO trust funds over the last 10 years.

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The donation to the WTO’s Doha Development Agenda Global Trust Fund (DDAGTF) will finance training for officials in Geneva and elsewhere to help them better understand and implement WTO agreements and to enhance their negotiating skills. Since the creation of the Fund in 2001, over 2,500 training and capacity building activities have been organized.

Director-General Roberto Azevêdo said: “I want to thank the Republic of Korea for its ongoing generosity. This donation will be a very important contribution to ensuring that developing and least-developed countries expand their trade capacities so that they can better integrate into the world economy and improve living standards for their citizens.”

Korean Ambassador to the WTO, Choi Kyonglim, said: “An increasing number of countries have proven that international trade is crucial for economic growth, poverty eradication and national development. Korea strongly supports the WTO’s efforts in helping developing and least-developed country members to make the best of trade opportunities. Korea will remain committed to contributing to trade capacity building programmes to facilitate their full participation in international trade.”

Overall, the Republic of Korea has donated nearly CHF 5 million to WTO trust funds since 2002 and is the fifth donor to the fund this year. Earlier this year, the fund received contributions from Austria, Germany, Japan and Lithuania.

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Director-General Roberto Azevêdo said: “New Zealand’s donation will be key to support the effective participation of LDCs in the upcoming WTO Ministerial Conference, thereby promoting their further integration into the global trading system. I welcome New Zealand’s continued generosity.”

New Zealand’s Ambassador, David Walker, said: “New Zealand is strongly committed to a rules-based multilateral trading system in which all WTO members can participate effectively. We are therefore pleased to be contributing to helping least-developed countries from the Pacific region take part in the Buenos Aires Ministerial Conference, which represents the highest level of the WTO decision-making process.”

New Zealand has contributed over CHF 1.5 million (over NZD 2 million) to WTO trust funds over the last 15 years.

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AUD 430,000 (CHF 330,000) of this contribution will help LDCs participate in the 11th WTO Ministerial Conference (MC11), which will take place on 10-13 December 2017 in Buenos Aires, Argentina.

AUD 1 million (CHF 770,000) will be provided to the Standards and Trade Development Facility (STDF), a global partnership aimed at helping developing countries comply with international food safety, animal and plant health standards and access agricultural markets more easily.

WTO Director-General, Roberto Azevêdo, said: “I welcome Australia’s continued support. These generous contributions will help developing and least-developed countries gain the skills they need to trade and to increase their participation in the multilateral trading system, reaping the rewards for growth and development that this can bring.”

Australia’s WTO Ambassador, Frances Lisson, said: “Australia is deeply committed to a multilateral trading system in which all countries can participate. We are pleased to contribute to helping LDCs attend MC11 and ensuring that the important work of the STDF on sanitary and phytosanitary compliance can be carried out.”

These contributions continue Australia’s longstanding record of generous assistance to the various WTO trust funds over the past 15 years.

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Kamilia Lahrichi

September 3, 2014: More than one year ahead of Argentina’s general elections in October 2015, six presidential pre-candidates spelled out their political and economic program during Industry Day on September 1 in Buenos Aires.

The Argentine Confederation of Medium-sized Businesses (CAME) organised this one-day event on strategies to boost growth of small and medium-sized enterprises (SMEs). This month, production decreased by 2.8%.

About 750 leaders from 23 provinces and representatives of 345 chambers and federations participated in the forum.

“It is important that the candidates get closer to SMEs, understand their realities and propose solutions to the problems we face,” explained Pedro Casacles, Director of the industry branch at CAME.

These issues “are vital for Argentina’s growth, as SMEs generate 60% of employment and more than 45% of sales,” he said.

Industry Day has been celebrated on September 2 since 1941. It commemorates the country’s first export in 1587.

This event is also the opportunity for Argentines to find out who they will vote for next year.

“For the first time, all the [pre-] candidates are in contact with the citizens and this is very important. This allows us to have a better understanding of what they offer and make better decisions,” said Mariela Galinger, Secretary of the Commercial, Industrial and Farming Center and Services in Argentina.

Anti-populist platforms

Contenders to the Pink House – the presidential office – sharply criticised Argentina’s populist government.

Amid worsening recession, industrial output has slowed and the unemployment rate rose to 7.5% in the second quarter.

Emblematic of the discontent with Cristina Fernandez de Kirchner’s administration, labor unions staged a national strike last week – the second in less than five months – to demand higher wages.

“Politics has to be done in another way,” said Mauricio Macri, head of the government of Buenos Aires and an opposition leader. The government should re-establish people’s trust and focus on “investment rather than spending”, he added.

Mr. Macri also said that the government should better manage the country’s resources.

In particular, inflation and the energy crisis are the two structural problems the Argentine economy faces, explained Sergio Massa, mayor of Tigre and another opposition leader.

An additional bone of contention with the government is the tax burden, which grew to 12% of GDP in recent years, stressed Mr. Massa.

He also lambasted the government’s heavy spending: “60% of public expenditure is spent on the national state and 40% on the provinces whilst 70% of the income goes to the national state and the remaining 30% to the provinces.”

“This imbalance has an impact on the investment capacity and generates imbalances and dependencies that break with the federalism and the stability of the provinces,” he said.

Ernesto Sanz, politician in the social liberal Argentine Radical Civic Union party, argued that “distributing wealth requires having a smart government”. He pointed out that the next government would have to deal with 12 million people living below the poverty line.

Mr. Sanz underscored that Argentina is heading toward “the end of an era,” with which Daniel Scioli, the pro-government pre-candidate, disagreed.

The governor of the Buenos Aires province toned down the opposition leaders’ speeches. “People are not looking for a total change,” he said. “We don’t need a revolution […] in Argentina” to overcome today’s economic difficulties, he added.

Courting SMEs

All candidates wooed business leaders by promoting market-friendly policies.

Julio Cobos, a former vice-president of President Fernandez de Kirchner, stressed the need to boost production, create jobs and reduce public spending.

He said that inflation could reach 18 percent in 2015 and then decrease to a single-digit number.

Argentina needs at least three years to control inflation, added Hermes Binner, leader of a political coalition. All sectors need to participate in the economy to overcome the current economic problems, he said.

Mr. Binner, who came second in the 2011 presidential election, said that the country must think about “the industrialisation of primary products to increase value added”.

Elisa Carrio, founder of the social liberal Civic Coalition ARI, called for revising Argentina’s import substitution policy, which hamstrings international trade.

On August 22, the World Trade Organization ruled that the South American country’s import restrictions breached global trade rules.

Ms. Carrio referred to Argentina’s first immigrants who started their businesses “with credit and hard work”. “Argentina needs to come back to that,” she said.

In addition, Mr. Sanz called for an end to “the assistance culture that leaves behind the work culture.” He referred to the tax system that makes Argentines pay taxes at the customs, in banks and in supermarkets.

Faithful to the government, Mr. Scioli railed against his rivals, saying that: “These are the ones who want to govern for a few, for the rich, those who promote fixing duties at zero on soybean and not explaining how they will sustain the social security system in Argentina.”

“Do not vote for the narco-state”

Known for being outspoken, Ms. Carrio called corrupted government officials “mobsters”. She argued that candidates are “liars” because “they answer to those who finance their political campaign”, making the audience laugh.

“I want to clean the state and the customs,” she said.

“I have a lot of sympathy for Elisa Carrio. I like very much [the fact] she says the truth that many do not dare to say. I would like her to ally with Macri,” said Ms. Galinger, a participant.

“I don’t mind if there is just one woman [pre-] candidate because there are a lot of women in politics [in Argentina],” said Marcela Padula, Coordinator at the Merchants, industrialists and professionals association.

Endorsement?

“These speeches are obviously political campaign speeches so we have to be careful,” explained Ms. Padula.

“[Yet,] what I liked is the attitude to solve problems – whether it works out or not –regarding employment and productivity,” she said.

Government officials who participated in the CAME event disapproved of the criticism of the administration.

“Those candidates are from the opposition and it is very easy to have a critical discourse without any projects,” said Juan Bias Taladrid, Undersecretary of Industry and Trade of the government of Mar del Plata, in the south of Buenos Aires.

“I am a civil servant. So, obviously the one who shared my position is Daniel Scioli. Of all the candidates, he is the one who has the best management skills and he is in charge of the largest province [the Buenos Aires province],” he said.

“I think that Daniel Scioli brings together the characteristics of the person that has to lead our country. [He is] a person of reason, dialogue and he bridges all the sectors,” said Ricardo A. Lopez Ruiz, General Director of Institutional Development for the government in Corrientes, a province in the north of the country.

Nonetheless, the majority of business leaders endorsed opposition leaders’ platforms.

“I liked very much the speeches of [Mauricio] Macri and Ernesto Sanz because they were very broad and realistic: [they spoke about] the reality of our country,” said Carlina E. Dorado, an entrepreneur.

“Macri […] wants a different, nicer and clean country with growth and development: this is what I liked the most about his speech,” she added.

Mr. Macri is known as an ally of the farming sector, which is why he has garnered support of wine producers.

“He understands best topics related to the regional economy. He gave the broadest [economic] panorama at the micro and macro levels,” said Jose Alejandro Pons, a wine producer.

Small pool of voters

Despite an apparent consensus amongst business leaders, they do not have the last word on the 2015 presidential election.

“We need to wait until next year’s election to see [who will be the next president],” said Basilio Nykolyn, Director of the industry of the Chaco province, which ranks last by GDP per capita of all provinces.

The populist administration of President Fernandez de Kirchner has seduced many Argentines with socialist policies like loans to poor families.

“Businesspeople do not form the majority. The thing is that the government’s social plans guarantee an important quantity of voters. This is unfortunate,” he added, whispering.

Other reports: WTO rules against Argentina’s protectionism

Poverty keeps growing in Buenos Aires as Argentina wakes up in default

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