Our operating environment

Interest rates continued to rise, pushing up borrowing costs for clients.

After a steep rise of the capital market interest rates in 2022, long-term interest rates remained relatively stable in 2023 before starting to come down towards the end of the year in anticipation of an expected change in monetary policy. Over the past two years, central banks have tightened monetary conditions substantially to contain inflation. During 2023, the ECB increased its deposit rate to 4%. High interest rates meanwhile dampened GDP growth. Dutch GDP growth decreased to 0.1% in 2023. In the eurozone, GDP growth slowed to just 0.5%.

The Dutch housing market started to cool, with prices down and fewer houses sold.

After years of rising prices, the average house price in the Netherlands declined in 2023, triggered by higher mortgage interest rates and weaker purchasing power due to higher inflation. In the second half of 2023 however, house prices started to recover again, supported by wage rises and a lack of new construction. Prices for more energy-efficient homes performed better as energy costs became a key consideration for prospective buyers.

Use of new technologies accelerated in a breakthrough year for AI.

During 2023, we saw a continued focus on the Cloud and blockchain, especially in tokenisation. There was also a substantial acceleration in the use of Artificial Intelligence (AI), specifically generative AI. This sub-field of AI allows us to further digitalise our processes, improve customer service and personalise banking.

Protecting client data is becoming ever more important – as it represents a source of trust in banks.

Data is playing an increasingly important role in banking. When managed correctly it can be used to develop personalised products and services and increase efficiency. Clients entrust banks with their data. This puts a responsibility on banks to protect client data. Banks are consequently investing more in cybersecurity to counter rising incidents of cybercrime, including phishing, identity theft and ransomware attacks that put clients at risk.

Clients are changing their approach to banking.

In banking, as in many industries, safety, hyperpersonal, and conversational are the main drivers for customer experience. Technology allows banks to offer reliable, seamless and personal 24/7 access. Alongside that, clients are looking for financial advice from their bank at key moments in their lives – when they buy a house, for example, or start saving for their pensions.

Businesses face continued skills shortages, particularly in data and digital.

The global labour market faces shortages of important skills. This applies to ABN AMRO too, especially in areas where there is strong demand, such as data analytics, IT, digital security, sales, customer care and risk modelling. Competition is fierce – so banks need to devote resources to recruiting and retaining staff.

Effects of growing political tensions are being felt in the real economy.

Over the past year, political uncertainty has increased, with the war in Ukraine, conflict in the Middle East and continued tensions between the US and China. The war in Ukraine in particular has had economic repercussions – most notably, in the form of higher prices for energy and food.

Increasingly, governments and regulators expect banks to support the transition to a more sustainable economy.

Banks are being called on to invest for long-term growth and support the transition to a more sustainable, low-carbon economy. With climate risk growing, banks are also playing an important role in helping clients become more climate resilient.

As a bank, we operate in a highly regulated sector.

Over recent years, banks have seen new regulations in areas such as data protection, anti-money laundering, and IT management. Major banking reforms under Basel IV are aimed at making banks more resilient to potential economic shocks. New rules are also being phased in on sustainable finance – including the EU’s Corporate Sustainability Reporting Directive (CSRD) and Sustainable Finance Disclosure Regulation (SFDR).