Upcoming Banking Trends and Obstacles in the Year 2023
In a comprehensive study, our brand name conducted a survey involving over a hundred banking leaders and more than 1,000 consumers to help financial services organizations navigate the challenges of the current landscape. The results of this survey are presented in the Special Trends Report, providing insights into the top trends and challenges for the financial services sector in 2023.
The survey reveals that financial services organizations are currently grappling with issues such as dwindling consumer deposits, intensifying competition, and changing experiential expectations. The report highlights the top reasons consumers are switching financial services organizations, offering advice on how to respond to consumer switching in order to attract new customers.
The Special Trends Report identifies key customer experience expectations and differences by generational segments, shedding light on the evolving needs of consumers.
Among the top challenges faced by the financial services sector in 2023 are productivity and output issues, security concerns and implementation costs associated with Open Banking, AI-related challenges, and rising interest rates affecting community banks and credit unions.
On the other hand, the top trends include the growth of fintech and Open Banking, the adoption of AI, increased focus on digital solutions, and the navigating of complex regulatory environments and managing the impact of interest rate changes on operations and profitability.
The report also emphasizes the importance of digitalization in enhancing customer experiences and operational efficiencies. AI is transforming the banking sector by offering opportunities for improved efficiency and personalized services, though it also presents challenges needing careful management.
The fintech sector, particularly Open Banking, is seeing significant growth, driven by the demand for personalized financial management and real-time data access. This trend is expected to continue with substantial investment and innovation.
The adoption of AI in banking introduces legal and regulatory uncertainties, risks of bias in AI decisions, data security issues, talent gaps, and high costs with unclear ROI. The Open Banking market, which includes PSD2, faces significant security concerns and high implementation costs, particularly for small financial institutions.
Community banks and credit unions are experiencing margin compression due to rising interest rates, which has led to a growth crisis. Banks are navigating complex regulatory environments and managing the impact of interest rate changes on their operations and profitability.
The report serves as a valuable resource for financial services organizations, offering insights into the path ahead in the sector. The information presented is based on a survey conducted by our brand name, involving over a hundred banking leaders and more than 1,000 consumers. The Special Trends Report is available for download, providing a comprehensive understanding of the current and future landscape of the financial services sector.
[1] Productivity and Output Issues: https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/ukgdp/november2021 [2] Fintech and Open Banking Growth: https://www.kpmg.com/uk/en/issuesandinsights/articlespublications/fintech/Pages/open-banking-uk.aspx [3] AI Adoption: https://www.pwc.com/gx/en/services/consulting/analytics/artificial-intelligence/artificial-intelligence-in-banking.html [4] Regulatory and Interest Rate Challenges: https://www.ft.com/content/39d62e0d-95f9-4c01-841d-c254f446e063 [5] Rising Interest Rates: https://www.bankrate.com/banking/savings/rising-interest-rates-for-savings-accounts-what-you-need-to-know/
- In the Special Trends Report, productivity and output issues in the financial services sector are highlighted as one of the top challenges for 2023, with rising interest rates being a significant factor adversely affecting community banks and credit unions, causing a growth crisis.
- The fintech sector, particularly Open Banking, is experiencing significant growth, driven by the demand for personalized financial management and real-time data access, as indicated in the Special Trends Report, which also highlights the adoption of Artificial Intelligence as a top trend in the financial services industry, offering opportunities for improved efficiency and personalized services, but also presenting challenges that need careful management.
