Innovation and resilience: The role of financial services in a changing world

Interview with Heiner Herkenhoff, CEO of the Association of German Banks in the blog series “The role of financial services in a changing world.” First appeared on the pwc blog on 25 March 2026.

Our white paper “Innovation and Resilience: The role of financial services in a changing world” will be published next week. As part of writing the paper, we conducted many interviews with experts in order to collect a variety of perspectives from the industry. We wanted to share these valuable insights in this blog series, providing a peek behind the curtain at the role financial enterprises play as providers of capital, investors, risk managers, drivers of innovation and advisers to clients navigating the green transition.

To begin the series, we are publishing our interview with Heiner Herkenhoff, CEO of the Association of German Banks.

What role do you think the financial sector has to play in our changing world?

The green transition is and remains an ecological necessity, not to mention that it just makes economic sense. Creating the right incentives is a job for politics. If the right incentives are in place, it will strength-en the local economy, reduce risks and increase resilience for businesses.  

Businesses are then empowered to make the necessary changes. Banks facilitate these processes and add momentum. They provide loans, capital market financing and consultation, adding their unique perspectives to an ongoing dialogue. Their work is everywhere, from providing financing for modernising existing processes up to and including creation of new, more climate-friendly business models.

And they work from a very simple principle: banks finance sustainable initiatives. They make investments possible, secure added value, help reduce dependencies and improve the ability of the country or region to compete on the global stage.

Which channels, products and services can financial enterprises (banks, insurances, asset man-agers) use to provide clients and business partners with expertise on risks associated with the green transition? 

Banks provide expertise on risks primarily during the loan granting process. In addition to creditworthiness, they also assess ESG risks. This includes risks related to climate and the environment, CO₂ price developments and whether or not a business model is sustainable over the long term.

Banks are constantly developing their financing instruments, always taking these factors into account. Transition finance is becoming ever more important. Banks provide targeted support for enterprises as they transition into a more sustainable business model, instead of excluding them from the loan granting process entirely.

Structured dialogue with business clients is an important tool here. Banks make use of their expertise in the sector and their perspectives on risk, question assumptions and provide support for investment decisions as part of ongoing dialogue or directly as part of the process of granting a loan.

In your view, what role do transparent transition plans for financial and industrial enterprises play when it comes to predictability and an increased ability for financial institutions to com-pete on the global stage? 

Transition plans are not simply an end in and of themselves. These plans are a key instrument for strategic development. They demonstrate how enterprises will react to increased costs, new risks, new technologies and changing framework conditions, and how they plan to adapt their business strategies.  

For banks, such plans are an important piece of information for a differentiated and individual risk assessment tailored to a specific company. Convincing transition strategies or measurable sustainability goals could also be included in evaluations as an alternative. The depth and scope depend on the size of the business, sector, risk profile and type of financing.

And of course, the financial sector is responsible for systematically managing ESG risks, with supervisors expecting plans for doing just that. What we need is a proportional, practical approach that ensures that the relationship between the effect of the measures and the burden they represent is expedient - particularly for small and mid-sized banks.

What opportunities do innovative, climate-friendly products and services offer to the financial sector? 

The most important factor will be financing and consultation that matches the specific transition plans in question. Discussing opportunities, risks and framework conditions improves customer relations and creates new points of reference.  

Banks provide loans that allow for investment in more efficient equipment, new technologies and changes to production processes. There are also specialised types of financing for individual transition areas. In addition, many institutions also provide advice for private clients, for example when renovating their house to meet new energy guidelines, finding climate subsidies and making green investments.

Larger institutions also offer additional solutions for complex financing, combined subsidies and capital markets. To continue to do so, they require proportional, practical regulations, which facilitate banks of all sizes as they lean into their strengths to effectively support investments, competition and value creation. 

Interviewer: Martin Weirich.