As we approach the middle years of the current decade, banks face mounting pressure to adapt to a market defined by unsettling technological developments, uncertain geopolitics and regulators that frequently press conflicting priorities.

Two years on since breakthroughs in generative AI attracted global headlines, bank executives remain transfixed with how emerging tech will refashion the industry, enabling new fields of automation and potentially upending business models. Such sentiments are underlined by research conducted to coincide with this year’s edition of the Global Bank Review, which focuses on the theme of adaptation. Polling bank executives, we asked which factor will play the biggest role in reshaping the industry – ‘Digital & emerging technology’ was by far the most cited, highlighted by 46% of respondents. Technology was also central to another key finding, with 90% of respondents saying that cyber risks have increased over the last 12 months – a striking sentiment given that such threats have been prominent for years.

With technology increasingly central to banks’ service propositions – both as a sword of competitive advantage and shield of enhanced operational and cyber resilience – we break down the key questions institutions need to consider in contracting with vendors and technology providers. Emerging digital tools feature large in another of our leading articles, exploring customers’ rising expectations for personalised services and slick digital tools. In an age when no one expects a Henry Ford-style, one-size model of retail banking, applying such tools to complex legacy systems and products would, in isolation, present a huge challenge. But with such innovations being impacted by regulatory fields such as data privacy and information security, it is clear why such topics attract a mix of anticipation and wariness. However, as the deployment of GenAI in other sectors continues to gather pace and the benefits of this become more transparent, adapting bank businesses to harness these benefits in light of current and likely future reaction from regulators and customers will require deft balancing.

The entwined worlds of complex geopolitics and evolving regulatory demands present other big issues dominating bank agendas. While the onslaught of macro regulation in the wake of the global financial crisis has now slowed, the financial services industry faces more targeted regulation as policymakers strive to keep pace with evolving digital tools. With regulated banking safer but less profitable and increased barriers to global trade, questions remain about the extent to which regulators are pursuing goals like competition, stability and growth which can easily come into conflict with one another. Likewise, social expectations on banking demand delicate balancing. Even if some short-term emphasis on ESG has receded in the last two years, regulated lenders are still being held to expanding yet unpredictable standards of their respective social licences. Witnessing the recent debate around debanking is a reminder that there are few easy answers for institutions serving polarised Western societies.

All these issues and more are explored in this edition, which draws upon insights from Herbert Smith Freehills’ global network of banking law experts. As banks face up to the imperative for reinvention, we hope this report can frame some of the most challenging questions and help provide a few of the answers.