Banks have long played a special role in the economy by commuting savings into loans that support investment and consumption.
Their central role in daily life is why banking crises tend to be associated with more severe recessions and trigger profound
public concern and scrutiny. Banks have always faced a complex mix of operational, competitive, and economic pressures, and in
an increasingly interconnected world, those risks are accelerating, colliding, and worsening in new and unexpected ways.
Banks have entered the Era of Exponential Risk, where greater connectivity and complexity has created a uniquely unpredictable
operating environment.
Today’s macroeconomic picture is unsettled, with an array of ambient threats to certain banking systems around the globe. Inflation,
high interest rates, and possible recessions in some markets continue to swirl. Banks are also seeing greater competition for deposits
and funding on top of margin pressures, all while the next phase of Basel implementation is set to put more pressure on capitalization
levels.
Rapidly changing technologies introduce further unknowns as banks seek to unlock the transformative potential of generative artificial
intelligence while ensuring security in an age of increasing cyber crime.
At the same time, an unprecedented number of national elections in 2024 – in countries that account for over 40% of the world’s GDP –
creates political and regulatory uncertainty, with the potential for currency volatility and shifting monetary policy. Recent
geopolitical tension and regional conflicts have also posed challenges for banks, with new compliance mandates and constant due
diligence required.
Add to that the growing requirement for climate transition plans and portfolio stress testing, plus exposure to the physical hazards of
extreme weather via the assets on banks’ balance sheets. It’s no surprise that banks are competing for insights to make sense of what’s
coming next.
The global banking sector is at a crossroads, but the fundamental need for banking and lending hasn’t changed – particularly given
immense financing needs as the global economy decarbonizes and developing nations grow and diversify their economies. With the right
approach, banks can position themselves to navigate turbulent times and unlock opportunities by embracing new technologies that
reorient their approach to risk, enhance data, streamline operations, protect from fraud, and augment customer experience.
Successfully addressing the sheer scale of challenges facing the banking sector requires bold, perceptive insights that leverage the
most advanced data and analytics possible to establish a 360-degree view of risk – a view that Moody’s is well equipped to provide
its banking customers.
Moody’s brings together vast datasets, deep experience, and cutting-edge technologies to provide specialized, agile intelligence across
credit, climate, cyber, compliance, and supply chains that enable banks to make lending decisions, manage credit risk, optimize balance
sheets, meet compliance requirements, and more. Moody’s industry-leading solutions empower banks to decode risks, unlock opportunities,
and confidently make decisions in this new era.
“It’s no longer a simple case of banks asking their partners to sell them a product. Now, they need a partner who can bring them valuable data, insights, and practices – and combine these with an understanding of what makes the bank unique – to inform decisions that create value.”
– Jacob Grotta
General Manager, Banking Solutions, Moody’s
The opportunities are vast. With a holistic understanding of risk, banks can move forward to embrace more personalized, insightful
experiences for clients and internal teams while taking advantage of streamlined workflows that allow them to make faster, better
decisions. Simplified, reliable processes that connect disparate applications to embed resilience and enable banks to meet threats
head on, revolutionize supply chain sustainability, and unlock organizational efficiencies.
A new era for banking requires a new way of working, where assessing risks in real-time and breaking down internal silos becomes the
new normal. Where advanced stress testing and scenario modeling reveals hidden shocks and potential contagion risk in the system.
And where leveraging the latest technologies empowers leaders to make financial decisions with confidence.
Moody’s banking solutions
