PwC on the outlook for traditional financial services amid COVID-19

Traditional banking and financial services has been disrupted by the accelerated need for digitisation and fintech amid the Covid-19 crisis. Joining CNBC Africa to unpack how global markets and African financial services are surviving the current crisis is John Garvey, Global Financial Services leader at PwC.

Thu, 08 Oct 2020 10:57:57 GMT

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AI Generated Summary

The secondary effects of the crisis on banks and insurance companies are expected to create challenges in terms of outstanding loans, loan losses, and reduced business activities.
The accelerated digitization of financial services is likely to result in long-lasting changes, with institutions redirecting their investments towards enhancing digital channels, thereby benefiting both the industry and consumers.
Various sectors within financial services, including asset and wealth management, insurance, and real estate, are experiencing shifts and challenges, such as the emergence of new opportunities in ESG investing, competitive pressures on traditional funds, and the transformation of the real estate market towards suburban office spaces and logistics hubs.

The world of traditional banking and financial services has been significantly disrupted by the rapid need for digitization and the rise of fintech, particularly in the wake of the COVID-19 pandemic. The impact of this crisis has sent shockwaves across global and African markets, leading to both challenges and opportunities for the industry. In a recent interview with CNBC Africa, John Garvey, the Global Financial Services leader at PwC, shared his insights on how the sector is navigating these turbulent times. Garvey highlighted the secondary effects of the crisis on the financial system, emphasizing the potential strain on banks due to outstanding loans and loan losses, as well as the challenges faced by insurance companies with reduced business activities. However, he also pointed out the positive aspects of the industry's accelerated digitization, which has enabled financial institutions to redirect their investments towards enhancing digital channels. This shift, according to Garvey, is likely to be a long-lasting change that will benefit both the industry and consumers. The interview delved into the broader implications of the crisis on various sectors within financial services, including asset and wealth management, insurance, and real estate. Garvey noted the emergence of new opportunities in ESG investing and alternative asset classes, while also acknowledging the competitive pressures faced by traditional equity and fixed income funds in a low-interest-rate environment. He highlighted the trend towards consolidation in certain sectors and the need for differentiation to justify fees in a market increasingly dominated by passive funds. The discussion also touched upon the evolving dynamics in the real estate market, with a shift towards office spaces in suburban areas and the conversion of shopping malls into logistics hubs to meet the demand of digital commerce. Despite the challenges posed by the crisis, Garvey emphasized some positive trends in residential real estate, driven by the increasing demand for larger spaces due to remote work arrangements. Looking ahead, the financial services industry is poised for a transformation that will shape its future landscape in the post-COVID-19 era. While the road ahead may be uncertain, the industry's resilience and adaptability to digital disruptions offer a glimmer of hope amid the ongoing challenges.