Is The Global Banking System Facing Economic Risk?

There’s mounting worry over the fragility of the global banking system and the threats posed by the banking system, according to a joint research study by PwC and CSFI. The results to the study were disclosed at RiskMinds 2015, an annual risk management conference currently being held in Amsterdam. The poll gathered responses from more than 670 bankers across 52 countries.

The report, titled “Banking Banana Skins 2015,” lists 24 possible and looming risks to banks, and at the top of the list are macroeconomic concerns, beating out regulation, which took the top spot last year. The top element of the macroeconomy that garnered concern? High debt levels and slowing growth in emerging economies. The banking system as a whole might not be able to shake off the impact of those trends.

[bctt tweet=”The banking system as a whole might not be able to shake off the impact of high debt levels and slowing growth in emerging economies.”]

As noted by one unnamed source: “Higher indebtedness brings greater financial fragility. Regulators and banks have made some progress in reducing leverage in the banking sector, but it remains high nonetheless. And the increasing indebtedness of borrowers leaves banks vulnerable in the face of economic shocks.”

Perhaps not surprisingly, bankers are also worried about financial crime, especially cybercrime. That jumped from number nine to number two of top worries year over year. There’s concern that banks may not be able to combat fraud efficiently. The report also notes caution over the banking cultures within the organizations themselves, with no real deterrent coming from fines or new regulations.

China also appears on the list of worries, with a short leap to concern number 15 from 17 last year. That comes in tandem with the lingering impact of weak commodity prices, which are impactful on economies that are largely dependent on those commodities, this year’s report said.