For example, we have seen difficulties from banks in arranging promotion of risk culture and cascading the “tone from the top” to different levels of staff, simply because of the lack of F2F interactions. This has tremendously reduced the opportunities for staff to build rapport and foster a common culture, which is an important element in the culture promotion efforts. 5. Secondly, the pandemic disruptions have effectively put bank culture under stress test. Against the new mode of banking operation with significantly reduced F2F interactions, both amongst banking staff and between banks and their customers, there are signs of increasing hurdles in maintaining a sound bank culture. 6. On one hand, there are challenges in ensuring robust controls in a non-F2F environment. 1/4  BIS central bankers' speeches  Reduced physical oversights of staff activities by supervisors could greatly reduce the effectiveness of conventional control mechanisms and practices that worked well in the past, and thereby increased the risk of poor customer outcomes. 7. At the same time, the pandemic is driving changes in customer behavior. Customers have tried to avoid visiting bank branches in person as much as they can. If we look deeper at the statistics, the customer behavior of investment activities registered a significant change in the past two years. The proportion of online investment transactions out of all channels of retail banks has increased from 37% in the first half of 2019 to over 50% in the first half of this year.
In the second case, that is if the situation is rather one of a cyclical upswing, then clearly credit growth will have to undershoot nominal GDP growth for many years in the future. In both cases the present situation with credit growth significantly exceeding nominal GDP growth is not sustainable. However, the challenge to the financial industry to adapt to a much lower growth of credit is clearly larger in the second. This holds even if a harsh backlash in the form of an outright crisis can be avoided. Unfortunately it is not possible to precisely ascertain where we stand and what the future holds in store. Nevertheless, I will try to bring some clarity to the issue by examining – first – possible explanations for an increasing credit-to-GDP ratio (section 3), then by assessing their explanatory power in the Swiss case (section 4). Section 5 will conclude. 3  Between 2006 and 2008, the ratio temporarily decreased, as a result of the strong growth of GDP in this period. 4  In this context, it is important to note that a vast majority of outstanding loans in Switzerland are granted as mortgages (mortgage volume to GDP: approx. 140%). The discussion of the Swiss situation will thus focus mainly on mortgage loans. 5  As a third scenario it is also conceivable that there is a structural shift during which credit overshoots temporarily. This would also imply a certain correction down the road.