📉 The macro environment is challenging
Not only for fintechs, but also for banks
What can banks do now?
McKinsey & Company studied 600 banks in the last 10 years
The top 10% are leaders vs. the bottom 10% laggards
The differentiation is early on
By year 3 after the 2008 Great Financial Crisis
Leading banks were 96 ahead by index
Then they maintained the lead
Widened to 160 by 2020
Building the lead early on pays long-term dividends.
But how to achieve that?
McKinsey offers the following concrete advice.
🟦 4 Short-term steps to absorb the losses in 2023
Analyze repricing opportunities
Retain talents with non-financials
Refresh non-performing debt programs
Calculate capital and liquidity accurately
📍Banks should leverage the recent experience in the 2020-2021 Covid period.
🟦 Up-to-date stress testing and scenario planning
Validate assumptions
Leverage new data
Update frequently
📍Given the fast-shifting environment, it is recommended to perform stress testing and scenario planning twice a month.
🟦 Aim resilience in the long term
Operational resilience
Technology resilience
Business model resilience
📍All newfound resilience would enable banks to capture the opportunities in a crisis - strategic M&A of fintechs/other FIs.
Graph source: McKinsey
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