Banks were early adopters of digital advances, but being frontrunners in financial technology has created unique challenges for banks, especially as agile fintechs flood the field, equipped with innovation without legacy infrastructure. Will banks be consigned to the backfield, or can they exploit their enviable assets to best advantage?
Following the launch of The Clearing House’s Real-Time Payment (RTP®) service in the US—and with the Federal Reserve hard at work on a similar scheme known as FedNow—instant payments are fast becoming a reality in the US. Amid these changes, what role can banks play in helping clients maximize the opportunities of real-time payments?
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Following the global financial crisis, regulators focused on ensuring that banks had access to enough liquidity to cover demands for wholesale funding. But another concern threatening banks’ stability is their requirement to draw down existing business credit lines, which in the immediate aftermath of the pandemic led to cuts in new corporate lending, investment and growth.
When bitcoin, the first cryptocurrency, was birthed in 2008, few envisioned it becoming legal tender. But it did, in September 2021, in El Salvador. The Central American country is on a growing list of emerging markets embracing cryptos and CBDCs as preferred currencies due to their many benefits, blazing the trail for global acceptance.
European investors are understandably biased toward European equity opportunities, but relative returns vis-à-vis the US may cause them to doubt this strategy. A reversion may be imminent, with Europe’s comparative advantages, such as earnings growth, equity-market composition and sustainability, making it the wiser choice in the future.
Decentralized finance is part of the growing distributed ledger technology ecosystem, with decentralized lending processed via smart contracts on DLT networks. DeFi lending is in its infancy and doesn’t threaten established lenders, but as the system’s bugs are ironed out—and it incorporates traditional use cases—it definitely could.
The world of banking and financial services has changed vastly in recent years. Even before the pandemic, the space had been increasingly catalysed by a wave of rapid digitalisation that has served to expand the number and variety of products available across the market.
The quantum leaps made in payment technology over the past 10 years have transformed every part of the merchant acquiring landscape. Rampant M&A activity, the accelerating shift to ecommerce, and the influx of non-bank fintech players have up-ended tried and trusted business models.
The past two years have seen many ups and downs in banking, but one major “up” story is that of Nordea. As CEO Frank Vang-Jensen explains, Nordea turned things around by centring its operations on its customers and following an ambitious new three-pronged business plan. Nordea’s example can help other banks get back on track to success.