On the Road to 2035, Banking Will Walk One of These Three Paths
The banking landscape of 2035 could take dramatically different shapes, according to a recent Economist Impact report. Three scenarios emerge: traditional banks reinventing themselves to regain trust, climate action reshaping the entire financial sector, and a fragmented world with competing regional financial systems. Each future presents unique challenges and opportunities for banks, from integrating AI and blockchain to funding the green transition or navigating geopolitical complexities. As digital transformation accelerates and global dynamics shift, banks must adapt to survive and thrive.
By Garret Reich, Senior Project Manager at The Financial Brand
The report: Banking in 2035: Three Possible Futures
Source: Economist
Why we picked it: Understanding the possible futures of the banking industry is vital for strategic planning and long-term decision-making. The scenarios outlined below — from digital transformation and rebuilding trust, to climate-driven changes and global fragmentation — highlight the complex challenges and opportunities that lie ahead. By exploring these potential outcomes, bankers can better prepare their institutions to adapt and thrive in an uncertain future. Moreover, the report emphasizes the expanding role of banks in addressing global challenges, suggesting that financial institutions may need to redefine their purpose and value proposition in the coming decades.
Executive Summary
Economist Impact’s latest report walks through three different potential scenarios that the banking sector will zero in on by 2035. Each paints a vivid picture of how technological advancements, shifting consumer expectations and evolving global dynamics could reshape the financial world as we know it.
This report explores a world where traditional banks have reinvented themselves to regain consumer trust, a planet transformed by decisive climate action and a fragmented global economy where regional powers vie for financial dominance.
Key Takeaways
- Digital transformation will be central to banking’s future, regardless of which scenario unfolds. Banks that fail to innovate and adapt to new technologies risk becoming obsolete.
- Trust will be a critical currency in the banking sector of 2035. Whether it’s through enhanced data protection, ethical AI use, or commitment to sustainability, banks must find ways to build and maintain customer trust in an increasingly complex world.
- The role of banks is likely to expand beyond traditional financial services. In all scenarios, we see banks taking on new responsibilities, whether it’s driving sustainable development, bridging geopolitical divides, or serving as the backbone for broader digital ecosystems.
- Flexibility and adaptability will be crucial for success. The future is uncertain and potentially fragmented, requiring banks to be agile in their strategies and operations to thrive in various possible environments.
Why we liked the report: The three scenarios presented are distinct and well-developed, each offering a unique perspective on how different trends might converge to shape the banking sector. This approach helps readers understand the complex interplay of various factors. They are difficult scenarios to sculpt, but the Economist team did a strong job.
Why we didn’t: The report provides rich qualitative analysis, but it could benefit from more quantitative data and projections to support its scenarios. This could include estimated market sizes, projected adoption rates of new technologies, or forecasted shifts in global financial flows.
Scenario 1: Transformed Banks Regain Trust
Picture this: A world where your entire financial life is at your fingertips, seamlessly integrated into your daily routine. This is the reality in our first scenario, where traditional banks have undergone a radical transformation to survive and thrive in the digital age.
In this future, the line between banks and technology companies has blurred almost to the point of invisibility. Open banking innovations, once a buzzword, are now the norm. Your financial data flows securely between institutions, allowing for hyper-personalized services that anticipate your needs before you even realize them yourself.
Gone are the days of juggling multiple apps and accounts. Instead, you interact with a unified digital platform that encompasses your bank accounts, investments, cryptocurrencies and more. This isn’t just convenient — it’s a whole new way of thinking about money and financial management.
But how did we get here? Traditional banks, facing existential threats from fintech startups and big tech companies, were forced to radically rethink their business models. They invested heavily in updating legacy systems, a process that was often painful and costly but ultimately necessary for survival.
The widespread adoption of artificial intelligence brought its own set of challenges. While AI dramatically improved efficiency and customer service, it also led to significant job losses in the banking sector. Banks had to grapple with the ethical implications of these changes, working to retrain employees and find new roles for human workers in this increasingly automated world.
Perhaps the biggest hurdle was rebuilding trust with consumers. After years of scandals and financial crises, banks had to prove that they could be responsible stewards of both money and data. This required a fundamental shift in corporate culture, with a new emphasis on transparency, ethical behavior and customer-centricity.
Here are the upsides: The rewards were substantial for the banks that successfully navigated these challenges. By making their services more equitable and accessible, banks were able to tap into previously underserved markets. The unbanked and underbanked, once relegated to the fringes of the financial system, became valuable customers. Migrants, youth and minority communities found that financial services were finally tailored to their unique needs.
Data became the new gold, allowing banks to offer unprecedented levels of personalization and risk management. By leveraging advanced analytics, banks were able to make more accurate lending decisions, reduce fraud and comply with regulations more efficiently than ever before.
Perhaps most excitingly, this new paradigm unlocked entirely new business models. Platform banking emerged as a dominant force, with banks serving as the foundation for a vast ecosystem of financial and non-financial services. Need a mortgage? Your bank doesn’t just provide the loan — it connects you with real estate agents, insurers and even furniture stores, all through a single, seamless interface.
As we stand in this imagined 2035, it’s clear that the banks that have thrived are those that embraced change wholeheartedly. They didn’t just adapt to the digital revolution — they became active participants in shaping it. The result is a banking sector that is more innovative, more inclusive and more trusted than ever before.
Scenario 2: Climate Action Paradigm Shift
Picture this: Let’s shift our gaze to a very different 2035, one where the urgent need for climate action has reshaped not just the banking sector, but the entire global economy.
In this world, the threat of climate change has finally galvanized global action on an unprecedented scale. The banking sector, recognizing both the risks and opportunities presented by this paradigm shift, has positioned itself at the forefront of the transition to a low-carbon economy.
As you walk down the street in this 2035, the changes are immediately apparent. Cities have been reimagined with sustainability at their core. Green buildings, powered by renewable energy, dominate the skyline. Electric vehicles glide silently along the roads, their charging stations as common as gas stations were in our time.
But the real revolution has happened behind the scenes, in the world of finance. Environmental, Social and Governance (ESG) investing, once a niche concern, has become the norm. Banks no longer see sustainability as a side project or a marketing tool — it’s now central to their business model and risk assessment.
But how did we get here? The path to this future wasn’t smooth. Banks faced significant challenges in integrating ESG principles into their operations. It required a fundamental shift in how they assessed risk, allocated capital and measured success. Short-term profitability often had to be balanced against long-term sustainability goals, a tension that was not always easy to resolve.
Changing internal culture proved to be one of the biggest hurdles. Many bankers, trained in traditional financial models, were initially skeptical of the need to consider environmental and social factors in their decision-making. It took years of training, hiring new talent and realigning incentive structures to fully embed sustainability into the DNA of these institutions.
But for those banks that successfully made the transition, the opportunities were enormous. As governments around the world implemented stricter environmental regulations and carbon pricing schemes, banks with strong ESG capabilities were well-positioned to thrive. They became experts at assessing and pricing climate risks, skills that became increasingly valuable as the impacts of climate change became more pronounced.
Here are the upsides: Financing the transition to a low-carbon economy opened up vast new markets. Green bonds, sustainability-linked loans and other innovative financial products became major profit centers. Banks played a crucial role in funding everything from renewable energy projects to the development of new, climate-friendly technologies.
In this 2035, banks have become key players in the fight against climate change. They’re not just reacting to a changing world — they’re actively shaping it, using their financial clout to accelerate the transition to a sustainable future.
The transformation hasn’t always been easy. Some banks, slow to adapt, found themselves saddled with stranded assets as fossil fuel investments became increasingly risky. Others faced reputational damage for perceived "greenwashing" when their actions didn’t live up to their sustainability claims.
Those that navigated these challenges successfully have emerged stronger than ever. They’ve won the trust and loyalty of a new generation of customers who demand that their money be used as a force for good. In doing so, they’ve redefined the very purpose of banking, positioning themselves not just as financial intermediaries, but as stewards of a sustainable future.
Scenario 3: A Fragmented World
Picture this: Our final journey takes us to a 2035 that might seem, at first glance, like a step backward. The era of ever-increasing globalization that characterized the late 20th and early 21st centuries has come to an end. Instead, we find ourselves in a fragmented world, where regional powers and alliances shape the financial landscape.
In this reality, the global banking system no longer revolves around a single center. The dominance of the U.S. dollar and American financial institutions has waned, challenged by rising powers and alternative systems. The world has become multipolar, with distinct financial ecosystems emerging around regional blocs.
As you travel from one region to another in this 2035, you might find yourself using entirely different payment systems and digital currencies. The SWIFT network, once the backbone of international financial transactions, now competes with alternatives developed by alliances of emerging economies. The Chinese Yuan has risen to become a major reserve currency, while a coalition of nations has created a new digital currency that rivals traditional fiat money.
How did we get here? The seeds were sown in the years following the COVID-19 pandemic, as nations increasingly prioritized domestic interests over global cooperation. Trade wars, technological competition and geopolitical tensions all contributed to the splintering of the global economic order.
For banks, this new reality presented both challenges and opportunities. The fragmentation of the global financial system increased the costs of cross-border transactions and made it more difficult to achieve economies of scale. Banks had to navigate a complex web of regional regulations and competing technological standards.
Reputational and cybersecurity risks also increased in this polarized world. Banks often found themselves caught between conflicting demands from different governments, forced to choose sides in geopolitical disputes. The threat of cyber attacks, sometimes state-sponsored, became a constant concern.
Here are the upsides: The rise of digital currencies — both state-backed and private — opened up new avenues for innovation. Banks that were able to successfully navigate the complex landscape of competing digital currencies and payment systems found themselves well-positioned to serve a global clientele.
The fragmentation of the global economy also led to the rapid development of new markets. As emerging economies in Africa and Asia formed their own trade blocs and financial systems, banks that were able to establish themselves in these markets found vast new customer bases. South-South cooperation intensified, creating new trade and investment flows that savvy banks were able to tap into.
In this 2035, the most successful banks are those that have become adept at operating across different regional systems. They’ve developed the flexibility to adapt to varying regulatory regimes and the expertise to navigate complex geopolitical situations. These banks serve as bridges between different economic blocs, facilitating trade and investment in a world that is both more fragmented and more interconnected than ever before.
Editor’s note: This article was prepared with AI language software and edited for clarity and accuracy by The Financial Brand editorial team.
