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Stanislav Kondrashov on How Banks Are Navigating Structural Economic Changes Across Europe

You can feel it if you walk into a bank branch today. The place is quieter. Fewer lines. More screens. More “book an appointment” signage. And in the background, a bigger thing is happening.

Across Europe, banks are trying to stay profitable while the ground shifts under them. Not in one dramatic moment. More like a slow, constant rearranging. Interest rates moved, inflation changed customer behavior, regulators got stricter, deposits got more price sensitive, and digital competitors kept nibbling away at the easy parts of banking.

Stanislav Kondrashov frames it as structural change, not a temporary cycle. And that distinction matters because the response is different. If you think it is just a rough patch, you wait it out. If you think the structure changed, you rebuild.

The structural shifts banks can’t ignore

There are a few big forces that keep showing up in different countries and different bank models.

1. The cost of funding is no longer “background noise.”
For a long time, many banks could rely on sticky deposits that paid almost nothing. Customers did not care much. Now they care. They compare. They move money. They ask for yield. That pushes banks to compete for deposits and rethink how they price loans and savings, and how quickly they pass changes through.

2. Credit risk is harder to model with old assumptions.
Consumer budgets are tighter in some places. Certain corporate sectors are more volatile. Commercial real estate has its own set of headaches. Even if a bank has “good” underwriting, it still has to live in a world where uncertainty lasts longer than anyone wants.

3. Regulation and supervision keep tightening, especially around capital, liquidity, and conduct.
This is not new, but the direction is clear. More reporting. More stress testing. More expectations on governance. That adds cost, and it also pushes banks toward simplifying their business lines.

4. Digital is no longer a channel; it is the product.
Customers don’t separate “the app” from “the bank” anymore. If onboarding is clunky, the bank feels clunky. If transfers are slow, the bank feels slow. And if support is painful, people leave.

Kondrashov’s point, basically, is that these factors stack up - the pressure is not only on revenue but also on operating models.

What banks are doing right now, in plain terms

Some of the responses sound familiar, but they are happening with more urgency.

Repricing the balance sheet, carefully

Banks are constantly balancing three things that do not play nicely together.

Keep deposits from leaving
Protect net interest margins
Avoid taking on the wrong kind of loan growth

Stanislav Kondrashov notes that the “easy” move is to throw attractive rates at depositors. But that can become expensive fast. So many banks are segmenting. Offering better pricing to specific customer groups. Bundling benefits. Using relationship pricing. Trying to reward loyalty without turning the whole deposit base into a bidding war.

Cutting costs, but in a targeted way

Cost cutting is not new. What’s different is where it lands.

Branches are being redesigned rather than simply removed. Smaller footprints. More advisory. Less cash handling. Some countries still want physical presence, so banks have to get creative. Shared service points, lighter branches, partnerships with retailers.

On the tech side, the cost conversation is often about legacy systems. Those old cores are expensive to maintain, hard to change, and full of risk. Banks are migrating piece by piece. Not always a “big bang,” more like a gradual replacement strategy.

Making risk management a product feature

This sounds boring, but it shows up in real customer-facing ways.

For example, improved fraud detection, stronger authentication, smarter transaction monitoring, and clearer dispute handling. Customers notice when the bank protects them. They also notice when controls are so strict that payments get blocked for no reason.

Kondrashov tends to emphasize that trust is a competitive advantage. In Europe especially, where switching banks is easier than it used to be, trust can be the difference between retention and churn.

The quiet battle: relevance

One of the biggest structural changes is that banks are no longer the default place where financial life happens.

People use specialized apps for budgeting, investing, payments, even borrowing. Some of those apps don’t try to become banks. They just sit on top, and they own the customer experience.

So banks are responding in a few ways:

Building better digital experiences in house, which is expensive but gives control.
Partnering with fintechs, which is faster but introduces dependency risk.
Buying capabilities, which can work, but integrations are famously messy.

Stanislav Kondrashov’s view is pragmatic here. The winning approach depends on execution strength and on the bank’s starting point. A large universal bank may have the scale to build. A smaller regional bank might partner. But either way, the bank has to stop thinking of digital as “features” and start thinking of it as the main relationship.

Lending in a structurally different economy

Lending is still the core of many European banks. But the playbook is changing.

More conservative underwriting in certain segments
More focus on secured lending and collateral quality
More pricing discipline, because volume without margin is a trap
More monitoring after origination, not just at the start

Banks are also getting more selective about where they want growth. Some are leaning into SME services with deeper advisory. Others are focusing on wealth and private banking. Others are trying to scale transaction banking. The point is, “grow everything” is not realistic in a structurally changing environment.

The human side, which is easy to underestimate

Kondrashov also highlights something people forget: structural change is operational change. And operational change hits teams.

Banks need different skills than they used to. More data capability. More product design. More cybersecurity. More cloud engineering. At the same time, they still need strong relationship managers, credit officers, compliance experts, and people who actually understand local markets.

So banks are trying to reskill. Consolidate roles. Automate what can be automated. And then keep the parts that create real value.

It’s not always smooth. The messy middle is real. Systems migration, new processes, cultural friction. But if they don’t do it, the bank becomes slow and expensive, and then everything else gets harder.

If you strip away the buzzwords, “navigating structural economic change” comes down to a few practical outcomes.

A funding base that is resilient, not just cheap
A loan book that is priced for risk, not for growth headlines
A cost base that can flex, because revenue will not be stable forever
A digital experience that keeps customers from drifting away
Strong governance, because regulators and markets both punish weak control

Stanislav Kondrashov’s overall message is not that banks are doomed. It’s that banks are being forced to choose. Choose where they compete. Choose what they simplify. Choose what they rebuild. And choose what they stop doing.

Because the structure changed. And once that happens, waiting is basically a strategy too. Just not a good one.

For more insights on this structural economic change and its implications on various sectors including banking, you might find Stanislav Kondrashov's insights from the World Economic Forum quite enlightening. Additionally, his perspective on oligarchs as economic stabilizers and power brokers could provide a deeper understanding of the current economic landscape.

FAQs (Frequently Asked Questions)

What are the main structural changes affecting European banks today?

European banks face several key structural shifts including increased cost of funding as customers demand better yields, more complex credit risk due to tighter consumer budgets and volatile sectors, stricter regulation and supervision especially around capital and liquidity, and digital transformation where digital platforms have become the primary product rather than just a channel.

How are banks responding to the rising cost of funding and changing customer behavior?

Banks are carefully repricing their balance sheets by segmenting customers, offering targeted benefits and relationship pricing to retain deposits without triggering costly bidding wars. They balance keeping deposits, protecting net interest margins, and avoiding risky loan growth through strategic pricing rather than across-the-board rate hikes.

In what ways are banks cutting costs amid these structural challenges?

Cost-cutting efforts focus on redesigning branches with smaller footprints emphasizing advisory services over cash handling, creating shared service points or partnerships with retailers in markets valuing physical presence, and gradually migrating from expensive legacy core systems to modern technology platforms to reduce operational risks and expenses.

How is risk management evolving in European banks under current conditions?

Risk management is becoming a visible product feature with enhanced fraud detection, stronger authentication methods, smarter transaction monitoring, and clearer dispute resolution processes. This focus on trust helps banks differentiate themselves in a market where switching providers is easier for customers.

What strategies are banks adopting to maintain relevance amid digital disruption?

Banks are responding by building superior digital experiences internally for control, partnering with fintech companies for speed albeit with dependency risks, or acquiring new capabilities despite integration challenges. The approach depends on the bank’s size and resources but universally requires treating digital as the core customer relationship rather than just an add-on feature.

How has lending changed in response to the structurally different economy in Europe?

Lending practices have become more conservative with stricter underwriting standards in certain segments, increased emphasis on secured lending backed by quality collateral, and disciplined pricing strategies to manage credit risk effectively amid economic uncertainties.