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Campus for Finance — WHU New Year's Conference 2021

Leading financial experts discuss whether banks can save the real economy

For the twenty-first time, the Campus for Finance — WHU New Year's Conference 2021 took place on January 20 and 21. Fifteen finance experts shared their assessments on the topic "Global Shocks — Can Financial Systems Save the Real Economy?" with the participants of the finance conference, which is traditionally organized by students of WHU — Otto Beisheim School of Management.

COVID-19 is changing global financial markets - and the Campus for Finance conference

2020 was a year of change. The world experienced a shock of global dimension, a pandemic has permanently changed the way we live and work. This development has not left the financial markets unaffected: share prices plummeted in March, mergers and acquisitions volumes fell rapidly, and there was an unprecedented increase in global debt and the need for financing in the private sector. This year, the Campus for Finance — WHU New Year's Conference 2021 addressed these and other topics. Due to pandemic-related contact restrictions, the conference took place in a hybrid format for the first time: The participants took part online via conference platform, the speakers gave their speeches either from WHU’s new video studio or from their homes.

Financial markets are increasingly decoupling from the real economy

One of the most prominent speakers was Christian Sewing, CEO of Deutsche Bank. As he elaborated, at first glance, there are many valid reasons to be pessimistic: New mutations make COVID-19 even more infectious, intensive care units are reaching their capacity limits, and the number of vaccination sceptics is growing rapidly. Heavily affected sectors such as tourism, hospitality, and aviation continue to suffer greatly from the lockdown and are recording record losses. At the same time, stock indices are rising to all-time highs; the short- and medium-term economic and market outlook is considered to be positive. So why do the expectations of the financial experts diverge so significantly from the devastating health issues and actual economic effects of the pandemic? According to Sewing, there are several reasons for this trend. In addition to the conclusion of Brexit and a new, democratic US administration, there are now more reasons for optimism. The new vaccines from Moderna, BioNTech, and Pfizer are a scientific breakthrough. Therefore, Sewing argued, we can assume that by the end of the year many struggling sectors of the economy will be back in business. A major uncertainty will thus be eliminated. A second important reason is the massive pent-up demand for consumer and durable goods. Sewing anticipates that this will materialize in the second half of the year and that people will make up for missed dinners and cancelled trips.

The way of working in the financial sector has started to change

But it is not just the economic outlook that has changed over the past twelve months. During the two-day conference, it became clear that the way of working in the financial sector has also begun to change. As Oliver Behrens, CEO of Morgan Stanley Europe, described, he would interact with clients via new communication channels. In addition, he would have to be more considerate to the needs of his employees. Dr. Michael Pickel, CEO of the reinsurer Hannover Re, also described challenges that are accompanying the new way of working. For example, it has become difficult to integrate new colleagues virtually into an existing team and almost impossible to win new clients via video conferences. However, Dr. Stefan Povaly, Senior Country Officer at J.P. Morgan Germany, also sees advantages. In many ways, he says, teams are better informed and connected because of the decline in business travel. Without the direct exchange on site, team members would also have to familiarize themselves with matters that would otherwise rather be covered by their colleagues.

2020’s challenges become this year’s opportunities

Whether financial markets can save a crashing real economy remains questionable. However, the COVID-19 pandemic has shown that the global financial landscape can certainly contribute to recovery. As Christian Sewing pointed out at the beginning of the conference, banks are at the center of economic transformation in their role as financial intermediates. They interact with clients, investors, and other stakeholders from across the globe. Therefore, it is now the responsibility of the banking industry to turn the challenges of the past into tomorrow’s opportunities.