Mounting challenges, some bright spots

A McKinsey report says banks have had to develop a new playbook for winning in payments. — AFP

BANKING and financial services is intricately tied to the economy, and the industry’s performance will almost certainly mirror economic growth, with the prospects going into the second half of 2023 weighed by a potential recession among certain developed economies on top of inflation and high interest rates affecting consumer sentiment.

A report from the Deloitte Centre for Financial Services (DCFS), “2023 banking and capital markets outlook”, noted that the correlation between economic growth and banks’ return on assets in both advanced economies such as the Group of Seven and select developing economies will remain strong and affect the industry’s performance.