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  • Frank Tian

📉 Banks Need to Act Now

📉 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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