Fragmentation, not as a replacement for the dollar system but rather as the gradual loss of its universality, means a new operating environment for an expanding set of actors. The question is not whether to act, but how to act decisively without locking into mistakes or foreclosing the strategic options that fragmentation itself creates. The Survive-Thrive-Drive framework, applied here, follows a logic similar to Roberts’ Risk-Reward-Resilience model but adapts it sequentially for actors whose exposure to fragmentation is immediate.
Banks
Surviving requires acting on the lesson of 2022: the forced exit from Russian correspondent relationships demonstrated what reactive de-risking costs without preparation. The challenge lies in markets such as India and the Gulf, where significant trade exposure meets the expansion of alternative payment systems, such as UPI and AFAQ. Banks should audit those relationships and stress-test their dollar-clearing dependencies now, so as to respond deliberately rather than reactively.
Thriving means positioning the bank as the trusted bridge between the regulated system and the alternative infrastructure growing alongside it. As alternative payment systems mature, the regulated system's trustworthiness becomes a commercial advantage. Banks that invest in geopolitical scenario planning now will be better placed to identify the client opportunities that fragmentation creates, such as USD-clearing services for Gulf clients or FX liquidity in new currency pairs.
Driving requires making decisive decisions that preserve flexibility later. HSBC's January 2025 reorganisation into distinct Eastern and Western business units illustrates one approach. By separating its Asia-Pacific and Middle East operations from its UK and European businesses, the bank created a structure that, ceteris parabus, preserves the ability to operate across diverging regulatory environments.
Corporate Treasuries
Surviving requires an audit by treasuries to identify which hedging corridors rely on the dollar pivot, where the dollar is used as an intermediate settlement currency. A European corporate hedging rupee exposure typically routes settlement through the dollar: INR → USD → EUR. If this pivot becomes unreliable due to sanctions, direct cross-currency instruments will be required, adding cost and complexity. This assessment is critical in regions where dollar dependence remains high as the geopolitical landscape evolves.
Thriving means building capacity ahead of any potential surplus recycling problem. For treasury functions with revenue in markets where repatriation is restricted, the risk is not yet acute, but the capacity to manage it takes time to build. Specific capacity will depend on the context, but may translate into larger Renminbi accounts, local investment vehicles, or in-country subsidiaries.
Driving requires integrating geopolitical corridor analysis, or how geopolitical shifts are redrawing trade and payment routes, into procurement decisions before restructuring suppliers. Reshoring or nearshoring supply chains is costly and, as the OECD finds, often relocates risk rather than removing it.² The goal is agility: building the capacity to adjust sourcing as corridors change, rather than locking into a supplier structure based on current geopolitical dynamics.
From Compliance to Strategy
Both actors increasingly view geopolitical risk in terms of compliance rather than strategy. EY and IIF's surveys show geopolitical risk rising sharply on banks’ agendas, from 56% of banks strengthening scenario planning in 2025 to 82% in 2026, reflecting a trajectory in the right direction. Yet, embedding this analysis in strategic decisions remains the more difficult task. In a financial system that remains dollar-centred but is less neutral and more operationally complex, the best-positioned institutions will be those that have integrated political scenario analysis into all decision-making frameworks.
