For many banks, attempts to get the banking sector “back to normal” after the 2008 financial crisis have felt like the curse of Sisyphus; their boulders made all the heavier by regulatory demands, public opinion and outmoded IT systems. Yet, despite the (cautious) optimism shown by the US Federal Reserve’s interest rate raise, the banks’ burdens show no sign of easing.
The brutal market gyrations that accompanied the start of 2016 were as sudden as they were perplexing. Was China’s economic slow-down the principal cause? What role was played by the oil price slump? Was geo-political nervousness about international terrorism or Russian expansionism a factor, too?
As the big banks have been on the defensive, rapid technological advances have thrown open new market opportunities for new challengers and FinTech start-ups. While some laud these advances as healthy of evidence of the free market, spurring revolution in once-sleepy banking services, others prophesy the genesis of the next financial crisis.
In recent days, however, these crises and challenges have faded into seeming insignificance, as the world wakes up to a post-EU Britain and a post-Britain EU. Beyond its impact on the global stock exchange and the downgrading of the UK’s credit rating, this new upheaval has led to major political instability on both sides of the channel. Yet, whilst figures such as Angela Merkel seek to downplay the EU’s desire to punish the UK others seem far less inclined to leniency, and the financial sector must survive in limbo, preparing for potentially radical changes in trade tariffs, freedom of movement, taxes and interest rates.
Against this background, striking the right balance between political appeasement, investment, retrenchment and regulation – both in the UK and EU – will be vital. To cope in this environment will be challenging enough. To thrive will demand all the agility and resilience the banks can muster.