As we consider the future of digital technology in the financial sector, it is important to take stock of the economic conditions that will play a role in accelerating or slowing the inexorable trend toward digitization. In this article we will look at both the secular and cyclical economic trends that will have an impact.
Cyclical Forces Impacting Bank Digitization
Most indicators point to a recession on the horizon. Inflation is outpacing wages (a concept economists
refer to as negative real wages), and this has already impacted consumption. Simply put, the money we
make does not buy as much as it did a year ago, and that’s important because two-thirds of the economy is consumer spending. Add the necessary tightening of monetary policy to deal with inflation and we have the recipe for a recession within the next few quarters.