Recent headlines have unsettled investors, banks, their customers, and regulators. The sudden collapse of storied banks with sometimes long histories exposed the fragility of financial institutions and how rapidly the contagion of panic can spread throughout the system. The notions of any bank being “too small for regulation” or “too big to fail” have been proven wrong. Recent events stand as a reminder of how vulnerable the banking sector can be when economic turmoil and events drive rapid changes in market conditions.

As commentators unpack the “post-mortem” moment of where it all went wrong for banks that went under this year, we must reflect on how the ramifications of their failures will impact the rest of the financial services (FS) industry, as well as potential domino effects on other sectors and the economy. Against renewed expectations of tighter risk management, reduced lending, and further regulations, industry leaders will need to change how they approach growth and innovation. Amid tightening regulatory frameworks and pressures to do more with less, they will need to be increasingly agile moving forward.

What’s more, business leaders are charged to balance it all against a backdrop of increasing regulation due to factors such as climate change and the drive towards further compliance measures. Environmental, social, and governance (ESG) goals represent a growing priority for the FS sector. These additional regulations are driving change across financial services and require more investments in people and technology.

Unsurprisingly, all of this leads to deferred or cancelled investment decisions, initiatives to cut costs and scaled-back growth ambitions.

How can you grow in an economic downturn?

Technology can undoubtedly have a significant impact. Automation can shorten the time to onboard clients, create better ways of serving customers and improve the communication between a financial services firm and its customer base–all whilst eliminating manual processes and reducing errors. Processes become more efficient and effective. Process automation technologies such as artificial intelligence (AI), robotic process automation (RPA), and process mining can help organisations across the FS sector innovate within complex regulatory frameworks.

Automation enables firms to embed risk controls directly into their processes for real-time reporting and audits that act as evidence of the controls’ ongoing effectiveness. From a compliance perspective, this is welcome news to an industry that faces ever-tightening regulatory frameworks.

And these technologies are continuing to evolve at pace. One key trend, implementing an enterprise-wide data fabric, is predicted to grow from USD 1.71 billion in 2022 to USD 6.97 billion by 2029, according to Market Watch. Traditionally, bringing together data from disparate systems inside and outside of an organisation has been very difficult and expensive to achieve. But data fabric allows you to get there quickly and efficiently without the need to migrate data—one of the key requirements for successful process automation.

Essentially, data fabric provides a “virtual data layer” for connecting and unifying existing databases. In the FS sector, this allows users to easily access risk governance policies, know your customer (KYC) data, and other business information. Organisations can also incorporate data fabric into workflows, removing silos and bringing it all together under a compliant framework.

Even as recent events surfaced risks and challenges , banks need not see further regulation as a burden or growth inhibitor. By embracing technology, especially process automation, FS organisations can avoid pushing growth and expansion plans to the sidelines. Indeed, technology will be the ticket to growth and innovation during these turbulent times.