Digital financial landscape threatens banks’ role as intermediaries

09/22/21 • 20 min

Stephen Tu, Melina Skouridou and Farooq Khan explain how four forces reshaping finance will likely reduce banks’ revenue from core activities and undermine their role as financial intermediaries. Plus, Alka Anbarasu explains why India’s banks will weather the stress from a COVID-19 resurgence, and Jasper Cooper gives an update on insured hurricane losses in the US.

Inside this episode:

Alka Anbarasu explains why India’s banks will weather the stress from a COVID-19 resurgence. (begins at 1:55 mins)
Jasper Cooper gives an update on insured hurricane losses in the US. (begins at 4:48 mins)
Stephen Tu, Melina Skouridou and Farooq Khan explain how four forces reshaping finance will likely reduce banks’ revenue from core activities and undermine their role as financial intermediaries. (begins at 7:11 mins)

Related content:

Banks – India: Resurgence of coronavirus raises asset risks but loan-loss buffers are sufficiently strong - A resurgence of coronavirus cases will lead to more problem loans. However, a sharp increase in problem loans is unlikely, and banks have sufficient buffers to absorb anticipated losses
Property & Casualty Insurance– US Hurricane Ida's Northeast track adds billions to insurers' losses - Hurricane Ida's damages through New York, New Jersey and surrounding states will increase insurers' losses by billions of dollars.
Reinsurance – Global: Weak La Niña and warm waters point to active 2021 Atlantic hurricane season - Above average sea surface temperatures, weaker trade winds and an enhanced West African monsoon result in more favorable conditions for hurricane formation and intensification this year.
Financial Institutions – Global: Four forces reshaping financial landscape have potential to dislodge incumbents - We identify four forces of digitalization that have the potential to dislodge incumbents from dominant positions in financial markets.
Banking – Global: Central banks aim to limit disruption when designing retail digital currencies - Banks would likely maintain their client-facing roles and would play a part in disseminating central bank digital currencies (CBDCs), but disintermediation risks will be heightened.
Banks – Cross Region: Wide use of digital currencies in cross-border payments would be credit negative - Potential future wide acceptance of central bank digital currencies in cross-border payments and settlements will result in lower fees and commissions for banks.

Inside this episode:

Alka Anbarasu explains why India’s banks will weather the stress from a COVID-19 resurgence. (begins at 1:55 mins)
Jasper Cooper gives an update on insured hurricane losses in the US. (begins at 4:48 mins)
Stephen Tu, Melina Skouridou and Farooq Khan explain how four forces reshaping finance will likely reduce banks’ revenue from core activities and undermine their role as financial intermediaries. (begins at 7:11 mins)

Related content:

Banks – India: Resurgence of coronavirus raises asset risks but loan-loss buffers are sufficiently strong - A resurgence of coronavirus cases will lead to more problem loans. However, a sharp increase in problem loans is unlikely, and banks have sufficient buffers to absorb anticipated losses
Property & Casualty Insurance– US Hurricane Ida's Northeast track adds billions to insurers' losses - Hurricane Ida's damages through New York, New Jersey and surrounding states will increase insurers' losses by billions of dollars.
Reinsurance – Global: Weak La Niña and warm waters point to active 2021 Atlantic hurricane season - Above average sea surface temperatures, weaker trade winds and an enhanced West African monsoon result in more favorable conditions for hurricane formation and intensification this year.
Financial Institutions – Global: Four forces reshaping financial landscape have potential to dislodge incumbents - We identify four forces of digitalization that have the potential to dislodge incumbents from dominant positions in financial markets.
Banking – Global: Central banks aim to limit disruption when designing retail digital currencies - Banks would likely maintain their client-facing roles and would play a part in disseminating central bank digital currencies (CBDCs), but disintermediation risks will be heightened.
Banks – Cross Region: Wide use of digital currencies in cross-border payments would be credit negative - Potential future wide acceptance of central bank digital currencies in cross-border payments and settlements will result in lower fees and commissions for banks.

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Inside this episode:

Dean Ungar discusses the implications for US health insurers should the Medicare hospital insurance trust fund run out of money. (begins at 2:48 mins)
David Yin tells us how a recent cryptocurrency ban in China is positive for financial institutions. (begins at 5:06 mins)
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