Recession, Rate Hikes, Diversity- What's Ahead for Banks in 2023
The end of 2022 can’t come soon enough for many in the banking industry. Sputtering capital markets, job cuts, raging inflation, the crypto meltdown and rising interest rates marked a year of upheaval. Whether 2023 brings revival or more of the same hinges to a large extent on the Federal Reserve.
Odds are high for a recession next year as the central bank continues — albeit at a slower pace — to boost borrowing costs in an effort to bring price pressures under control. While that typically means credit quality will suffer, the country’s biggest banks are in a strong position to weather a downturn, including one that further crimps the mortgage industry.
In fact, traditional banks might even get a respite on some fronts, as the expected economic headwinds force some of their upstart competitors in the fintech industry to retreat.
What won’t let up is pressure to deliver on diversity promises, and for banks to prove they’re making progress by providing more transparency on the makeup of their ranks.
What follows is a look ahead at what the industry might expect in 2023. (For a look back at 2022, click here.)