In a year dominated by speculation over the state of Australia’s big banks and the long-term effects of their actions on the Australian economy, it comes as little surprise that the fallout is continuing into 2019.

With all major lenders in the country facing serious criticism for the ways in which they dealt with some of the Royal Commission’s revelations and the issues concerning financial misconduct that they let happen under their watch, many people are now eagerly awaiting new developments.

The Royal Commission report is due on 1st February, and already, analysts and reporters are wondering what new legislation may be in store. The majority of the scandals that emerged from this crisis laid bare the culture taking place at major lenders and how bonus structures failed to prioritize customers, which threatened to derail public trust in the sector.

With the mindset that serious changes need to occur before they can get some of their reliability back, most of the big banks are at a crossroads and need to see what Commissioner Kenneth Hayne is recommending in terms of what their next steps should be.

Three key factors are at the heart of the report: whether any of the companies involved should face criminal charges for the way that they acted, whether new legislative powers should come into play and how the banks might change their practices.

The inquiry has dominated the banking sector and related media for the last year, which demonstrates the stranglehold that it has held on developments. With the report not due for over a month, there should be some volatility further ahead as banking shares try and weather the storm.

One of the main issues to come out of the inquiry in general concerned the major banks’ failure to run background checks when handing out loans. In turn, this increased the number of defaults that occurred, which should have a negative impact on the economy in the long run. This has already resulted in the property market’s present struggles.

Banks are tightening up their lending policies, and those looking to borrow are now feeling the pinch as they fail to receive the same kinds of agreements for mortgages and bank loans that they previously were able to obtain. This has dampened liquidity in the Australian economy but should be more helpful in the long term as fewer defaults occur. However, this also means that many are simply looking beyond the big banks to cover their lending as usual, and this sea change may be a permanent alteration in the lending market.

Many new players are now on the scene, and with the fintech sector currently booming, there is scope to believe that some companies will be able to appropriately challenge the big banks and vertical operations on a large scale sooner rather than later. If the banks are able to withstand these challenges, then how they deal with the upcoming report should indicate how confident they are overall.