Risks and Trends

World R&T 2021: Banks, Finance and Transatlantic Relations

Preview 2021-02-19
Risks and Trends will look into whether banks will survive the technological revolution and what the new US president will change in relations with the EU.

Banking and Finance (10:00 a.m.)

What is the future of banks. Financial institutions are currently on the brink of their greatest evolutionary crisis. For the first time, they have to face growing competition from small tech financial companies, and will soon have to face internet giants with their large client bases and capital greater than Wall Street's largest banks. Also, the sector has to deal with the reality of zero interest rates and increased regulatory burdens that change the conditions of the game and doing business. As a result, banks are faced with a choice whether to be competitive and protect themselves through regulation or to be open, embrace synergy and share the market and profits.

Cahill on how banks must change to survive. Antony Cahill is Managing Director Europe Regions, Visa. Previously, he had worked in Australia’s banking sector, serving as COO at NAB, among other positions he held. In the opening interview in the banking and finance block, Adam Czerniak, PI's chief economist and director for research, will ask him what open banking is and how banks approach the concept of sharing data with technology companies. They will also jointly consider what the bank of the future should be like and what the competitive advantages of commercial banks over fintechs might be. They will also talk about the difficult role of regulators who, on the one hand, must ensure a level playing field and, on the other, guarantee the security of the financial system.

Skiba on how to compete with new players. Leszek Skiba has been managing Bank Pekao since April 2020 (first, he served as the bank’s acting president, and on February 4, 2021, he was appointed head of Pekao). Previously, he had been deputy finance minister (from 2015) and was responsible, among other things, for supervising the country's macroeconomic policy. During the Risks and Trends, Piotr Sobolewski, PI's senior analyst for the financial sector, will talk to him about the biggest risks for traditional banking, including record-low interest rates and the growing competition from fintechs, bigtechs and challenger banks. He will ask why banks accelerated the digitisation of their processes only during the pandemic, and how they must change so that new rivals do not take over their customers.

Kuna, Sokołowska and Wincewicz-Price on the future shape of the financial sector. In the last part of the banking and finance block, we will talk to three observers of trends in the financial sector – Microsoft Polska’s Weronika Kuna, who deals with relations with the public administration sector and the government, and had previously served as a financial sector specialist at the NBP, Horum’s Marzena Sokołowska, who specialises in providing IT services for the financial sector as well as Agnieszka Wincewicz-Price, head of the behavioural economics team at the Polish Economic Institute and an economic philosopher. They will discuss with Adam Czerniak what the relationship between banks, fintechs and bigtechs might look like, how new technologies are transforming the way the financial system works, and how innovative financial services are changing the world.

World (3:00 p.m.)

How to restore transatlantic ties. Joe Biden's presidency began at a difficult time – after the election that divided American society and after Donald Trump’s supported stormed the Capitol. The new US president wants to restore American leadership in the world, restore the important role of international organizations and strengthen transatlantic relations. However, it faces unprecedented tasks and challenges. Biden must deal with the COVID-19 pandemic, face the rise of China, which emerged stronger from the health crisis, and is trying to replace America as a global superpower, and block the traditionally aggressive Russia with the support of Congress. Will Europe help him achieve those tasks? Will appealing to democratic values ​​enough to recreate the status of the Western world?

Donfried on whether partners will respond to America's call. Karen Donfried has been the head of the Washington-based German Marshall Fund of the United States (GMF) since 2014. Previously, she had worked as a European affairs analyst at the US National Intelligence Council and had served as special assistant to US President Barack Obama on the National Security Council. Interviewed by Piotr Łukasiewicz, PI’s analyst for security and international affairs, she will talk about whether the EU, which has just signed an investment agreement with China, will help America in its most important rivalry and whether Europeans, disappointed by America's isolationism in recent years, will want to resume their collaboration with the US in the global game. Both will also consider whom Biden will invite to the summit on democracy and what the president's approach to Central Europe will be.

Banking and finance


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Adam Czerniak
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Piotr Łukasiewicz, PhD
fmr. Senior Analyst for Security and International Affairs
Piotr Łukasiewicz, PhD
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Piotr Sobolewski
Senior Financial Sector Analyst
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Piotr Sobolewski
PI Alert

EU summit: Member States launch discussion on financing joint defence initiatives

State of play

Leaders approved appointments to top posts. At the EU summit that ended on Thursday night, they nominated Ursula von der Leyen for a second term as head of EurCom, former Portuguese Prime Minister António Costa as head of EurCou and Estonian Prime Minister Kaja Kallas as head of EU diplomacy. Italian Prime Minister Giorgia Meloni abstained from voting for von der Leyen and voted against Costa and Kallas. This means that Meloni is preparing for tough negotiations and may demand a high political price in return for his party's support for von der Leyen in her approval in the EurParl. Prime Minister Viktor Orbán voted against von der Leyen and abstained on Kallas.

They adopted the Union's strategic agenda for 2024-2029. Over the next five years, the Union's goals include a successful digital and green transformation by "pragmatically" pursuing the path to climate neutrality by 2050. Another objective is to strengthen the EU's security and defence capabilities.

Von der Leyen spoke of EUR 500 billion for defence over a decade. This was the EurCom estimate of needed EU investment presented by its head at the EurCou meeting. Poland and France were among the countries that expected the EurCom to present possible options for financing defence investments before the summit, such as EU financing of common expenditure from a common borrowing. This idea was strongly opposed by Germany and the Netherlands, among others. In the end, von der Leyen decided to postpone the debate until after the constitution of the new EurCom, i.e. in the autumn. And the summit - after von der Leyen's oral presentation - only launched a preliminary debate on possible joint financing of defence projects.

Poland has submitted two defence projects. These might be co-financed by EU funds. On the eve of the summit, Poland and Greece presented in writing a detailed concept for an air defence system for the Union (Shield and Spear), which Prime Ministers Donald Tusk and Kyriakos Mitostakis had put forward - in a more general form - in May. In addition, Poland, Lithuania, Latvia and Estonia presented the idea of jointly strengthening the defence infrastructure along the EU's borders with Russia and Belarus. Poland is pushing for the EU to go significantly beyond its current plans to support the defence industry with EU funds and agree to spend money on defence projects similar to the two proposals. But EU states are far from a consensus on the issue.

Zelensky signed a security agreement with the Union. The document, signed by President Volodymyr Zelensky in Brussels, commits all member states and the EU as a whole to "help Ukraine defend itself, resist efforts to destabilise it and deter future acts of aggression". The document recalls the EUR 5 billion the EU intends to allocate for military aid and training in 2024 (in addition to bilateral aid from EU countries to Kyiv). It says that "further comparable annual increases could be envisaged until 2027, based on Ukrainian needs" i.e. it could amount to up to EUR 20 billion. Ukraine's agreement with the EU comes on top of the bilateral security "guarantees" Ukraine has already signed with a dozen countries (including the US, UK, Germany, France, Italy). As Prime Minister Donald Tusk confirmed in Brussels, talks are also underway between Ukraine and Poland on the text of mutual commitments on security issues.

PI Alert

KO wins elections to the European Parliament

KO received 38.2 per cent of the vote and PiS 33.9 per cent, according to an exit poll by IPSOS. Konfederacja came in third with 11.9 per cent, followed by Trzecia Droga with 8.2 per cent, Lewica with 6.6 per cent, Bezpartyjni Samorządowcy with 0.8 per cent and Polexit with 0.3 per cent. According to the exit poll, KO gained 21 seats, PiS 19, Konfederacja 6, Trzecia Droga 4 and Lewica gained 3. The turnout was 39.7 per cent.

According to the European Parliament's first projection, the centre-right European People's Party (EPP), which includes, among others, PO and PSL, will remain the largest force with 181 MEPs in the 720-seat Parliament. The centre-left Socialists and Democrats (S&D), whose members include the Polish Lewica, should have 135 seats, whereas the liberal Renew Europe club (including Polska 2050) will have 82 seats. This gives a total of 398 seats to the coalition of these three centrist factions (EPP, S&D and Renew Europe) on which the European Commission under Ursula von der Leyen has relied on so far. The Green faction wins 53 seats according to the same projection, the European Conservatives and Reformists faction (including PiS) 71 seats and the radical right-wing Identity and Democracy 62 seats.