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The Cambrian Explosion: The Dawning of a New Era in Banking

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The modern American banking industry has continued to evolve since the Civil War more than a century and a half ago. A survey of history reveals four periods in which the evolutionary forces in banking accelerated, each marking the start of a new era, starting with the Civil War, followed by the Great Depression, the twin energy and inflationary crises, and most recently, the COVID-19 pandemic.

As with each of those points in history, the American economy was hit hard from the pandemic. Almost every market sector was impacted, while some industries suffered more than others. For example, early 44% of small businesses either temporarily or permanently closed their doors during the COVID crisis, and by the end of the second quarter of 2020, U.S. gross domestic product dropped at an annualized rate of 31.4%, three times further than the worst quarterly decline since World War II.

"The year 2020 underscored the importance of connection - connection with family, friends, coworkers and even strangers. We adapted how we lived and worked, and we relied on technology more than ever before to remain connected with one another."-Joe Turner, CEO of Great Southern Bancorp

As a result, the S&P 500 experienced the worst single day declines since Black Monday in 1987, states began issuing stay-at-home orders, and more than six million people filed for unemployment benefits during the last week of March, exceeding the previous record set in October 1982 by a factor of 10.

The Great Depression was the last time employment and output declined so far so fast, and during that dark time more than six thousand banks failed in just five years. At the start of the pandemic, financial institutions began accumulating delinquent loans and it seemed as if the banking industry would once again be greatly impacted by this economic crisis.

However, this time was different and financial institutions weathered the storm. Some even reported record earnings in 2020, stimulated by government aid. Banks emerged largely untouched from the pandemic, but this was not due to mere luck. It was due to an evolution within the financial services industry, which author John Maxfield, industry expert and Senior Banking Specialist at the Motley Fool, calls a “Cambrian Explosion”—that is, a unique transformation at a fast, never-before-seen pace.

In this exclusive report, Maxfield explains why this moment in time presents unexpected opportunities for financial institutions—if they understand their history and how we got to this moment. To persist and prosper through this banking evolution, financial institutions must understand the often-unpredictable sources of disruption as well as the competitive implications likely to emerge.

To learn more about how the most adept and prepared financial institutions succeed by capitalizing on random and unforeseeable events like those from the coronavirus pandemic and where the dawn this new era in banking is likely to go from here, download “The Cambrian Explosion” white paper now.