Shift in assets off bank balance sheets

Over the last decade, more than half of the $402 trillion in global financial system assets no longer reside on bank balance sheets. Instead, these assets have been transferred to mutual funds, insurance balance sheets, pension funds, sovereign wealth funds, and private capital. This transition has been driven by rising interest rates, which increased net interest margins and boosted the sector's profits by approximately $280 billion in 2022. Technological advancements have also played a role, as banks now focus on implementing Gen.E.I. and other quickly implementable solutions.