Banks today find themselves buffeted by a range of forces, many of which are accelerating. Long-term trends such as climate change and demographic ageing are picking up. Shock events like the covid-19 pandemic and the war in Ukraine have destabilised markets. The direct threat posed by both fintech and big tech companies is growing. Taken together, these forces of change are causing banks to evolve business models to meet new societal expectations and engage customers in highly dynamic digital environments.
More fundamentally, the sector’s rapid evolution and uncertain future pose a basic question: what is the purpose of banks? For centuries this was not up for debate: banks existed to take deposits, make loans and realise short-term profits. They will surely continue to do this—while also expanding their mission and focus. The current era may ultimately be seen as an inflection point for banks, when they began to balance a traditional shortterm profit-driven model with an alternative human-centred approach that creates longterm value via greater sustainability, resilience and inclusion. The ability to be both agile and purpose-driven, as well as winning customers over with a mix of digital innovation and resonant values, will be a prized asset.
But to chart a viable course forward, banks need a clear vision of the major trends and factors reshaping their sector. They must pinpoint opportunities and risks, evolving strategy with clarity about how the forces of change challenge old assumptions and undermine their business model. Doing so, however, requires a detailed understanding of what the future might hold.
For this project, sponsored by SAS, Economist Impact conducted extensive desk research to understand the trends and themes poised to impact the future of banking. We also interviewed experts to identify current and potential challenges and opportunities. Finally, we analysed how different combinations of trends—such as digitalisation, the shift away from fossil fuels or geopolitical fragmentation—may come together to form different possible future scenarios.
This briefing paper explores how the major forces impacting banks may evolve between now and 2035. It peers into the future through three potential scenarios for the sector. Each of them is possible, depending on the course of events that unfold between now and 2035. The overarching goal is to illuminate how banks can evolve their mission and business models to deliver value to customers, shareholders, communities and the natural environment. Challenges related to the climate crisis, economic inequality, political instability and technology ethics will grow in the coming years. What can banks do to address them?