Making sense of the future: 4 scenarios for global retail banking


Making sense of the future: 4 scenarios for global retail banking

Retail banking in the Age of COVID-19

The impact of COVID-19 is manifold. First and foremost for suffering patients and the people who take care of them, but also for many industries, including banking. What are its potential medium-term implications for retail banks? What scenarios should banking leaders be aware of, and what issues need to be addressed, in order to spark insight and spot opportunities?

Resilience in times of uncertainty

COVID-19 has left people and organizations around the world with a number of uncertainties. In the case of global retail banking, we can be sure that the virus and following crisis will change the landscape significantly, although we don’t know exactly how and to what extent. Still, banking leaders need to take decisive action to ensure that their organizations are resilient. We have identified 10 forces that will impact their organizations. These are listed below and discussed in more detail in our publication ‘Retail Banking in the Age of COVID-19 – Scenarios for Resilient Leaders’.

Retail Banking in the Age of COVID-19 – Scenarios for Resilient Leaders

10 forces that will impact retail banks

  1. Banks will be expected to play a societal role beyond shareholder return. 
  2. The collaboration between banks and government at the start of this crisis will increase as the economy safely reopens.
  3. Households will fundamentally re-evaluate their willingness to take financial risk.
  4. There will be an increased latitude to implement to implement cost reductions that would have been considered too bold before.
  5. New forms of financial supervision and new responsibilities for banks will emerge. 
  6. Systemic stability and infrastructure modernization initiatives will accelerate to enhance future resilience. 
  7. The speed of digital adoption will increase. 
  8. Banks’ investment horizons will become shorter because of other priorities (more certain returns, operational resilience, and cost reduction).
  9. Credit risk appetites will shrink.
  10. Remote operating models will evolve at an accelerated pace.


Just how much these 10 forces will actually affect retail banks depends on two critical sets of uncertainties. First, the severity of the pandemic and the pattern of disease progression. In the worst case, there could be a second wave of viral infections which will be even stronger than the one we saw in the spring of 2020. In the best case, the virus’s spread shows a rapid peak and then quickly declines. The second variable is the level of collaboration within and between countries. Obviously, a coordinated response will prove more efficient than a weak and divided response with a lack of coordination and accountability.

4 scenarios: from Passing storm to Lone wolves

Based on the 10 forces and the 2 uncertainties, we have identified 4 scenarios that retail bankers should be aware of. In the first scenario called “Passing storm”, the disease dynamic is relatively constrained and the health system and policy response are effective. However, the impact on SMEs and lower and middle incomes is already significant. If the pandemic is more prolonged and the collaboration to control the pandemic is mostly handled by large companies instead of governments, scenario 2 (“Good company”) is likely to happen. There is a third scenario, “Sunrise in the East’”, in which the collaborative health response is led by East Asian countries, taking the reins as primary powers on the world stage. In this case, the pandemic is already quite severe. Finally, there is a worst case scenario called “Lone wolves”, consisting of severe, rolling pandemics, insufficient global coordination and weak policy response. This scenario will consist of isolationist policies, shortened supply chains, and increased surveillance.

Threats and opportunities

Naturally, the different scenarios will have a different impact on global retail banking. In case of the Passing Storm, banking systems will emerge stronger, institutions will steadily recover, focused on rationalization and efficiency, and barriers to digitization will fall. However, in the case of the Lone Wolves scenario, smaller banks will struggle, provoking a wave of consolidation. Also, expansion by large banks will be heavily constrained, and credit availability and risk appetite will permanently shrink.

From responding towards recovering and thriving

Which scenario will take place, depends on a number of dimensions, from shifting consumer attitudes and regulatory responsiveness to technology adoption, operation model evolution, and risk management focus. We have mapped these dimensions and scenarios in our Deloitte publication ‘Retail Banking in the Age of COVID-19 – Scenarios for Resilient Leaders’. You will also find a closer look at the scenarios and their specific implications in this paper. We hope this information will help you to have productive conversations on the lasting implications of the crisis, and with moving beyond responding to the crisis towards recovering in the medium term, and eventually to thriving in the “next normal”.

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