In the Dark Waters scenario, a second wave of economic slowdown cripples the U.S. economy, led primarily by interest rate rises to address an unexpected surge in inflation. Large national banks scale back operations significantly, leading to another round of mass layoffs. The highly unstable financial environment results in even stricter banking regulations being enforced.
Europe enters into a period of long-term economic decline. The inability of Euro banks to rid their balance sheets of toxic assets further constrains growth and causes additional asset sales.
China successfully transitions from a capital investment-driven economy to a consumer spending-driven economy and its brands displace leading U.S. brands globally. This further intensifies downward pressure on U.S. growth.
Emerging market growth is once again disrupted by currency appreciation caused by the devaluation of the U.S dollar. This slowdown leads to a new wave of political instability created by a strong sense of anti-U.S. sentiment over the perceived mismanagement of the U.S. economic system.
Rapid advances in technology help smaller competitors offer value propositions that better focus on the customer experience and differentiate them from traditional banks. These propositions include more customized services—developed from customer insights drawn from big data analysis, social lending, and the advent of pure-play digital banks. Cyber attacks are a bigger threat in both frequency and sophistication.