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Our Predictions: 7 Banking Trends for 2023

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Digital TransformationThought Leadership


key points
  • FIs will have to innovate faster than ever to avoid falling behind competitors and ensure they’re positioned to take full advantage of new opportunities today and throughout 2023.

  • Digital transformation will continue to drive success and help FIs leapfrog their peers.

  • FIs will focus on a multi-channel customer-centric approach, which requires good customer data, customer centric processes, adaptable platforms and connected partners and employees.

With the anticipation of a global downturn, a number of banking and technology trends are emerging worldwide. As a result, financial institutions will have to innovate faster than ever to avoid falling behind competitors and ensure they’re positioned to take full advantage of new opportunities today and throughout 2023.

At nCino, we partner with more than 1,850 financial institutions around the globe, providing our leaders with an intimate understanding of the challenges and opportunities facing the financial services industry. Based on that expertise, here are 7 of their predictions for the year ahead.

1. Digital transformation will continue to drive success.

“The winning institutions on the other side of any potential economic headwinds will be those that focus on digitally transforming and preparing their digital infrastructure, so when they see the opportunity to grow quickly, they can leapfrog their peers,” said Josh Glover, nCino President and Chief Revenue Officer, in a recent interview with Wharton Business Daily. The conviction that financial institutions need to digitally transform remains, and a packaged cloud solution such as nCino is one way for them to deliver quick impact, manage their portfolios, and take good care of their customers.

“As you look at financial institutions that still have legacy systems,” says Glover, “those systems don’t have open APIs, the integrations are challenging, expensive and brittle, and it makes it incredibly hard to work with the data that allows them to take great care of their customers, balance risk and reward, and grow responsibly.”

2. There will be a focus on a hybrid customer experience.

While customers are happy to use digital channels for day-to-day transactions such as paying bills, they still want an actual human’s help when it comes to major life decisions like purchasing a home or starting a new business. The COVID-19 pandemic required many financial institutions’ customers to transition to digital channels out of necessity, but most organizations are now realizing that customers are seeking in-person engagement in addition to digital service. In 2023, it will be important for leaders to focus on a multi-channel customer-centric approach, which will require good customer data, customer centric processes, adaptable platforms and connected partners and employees in order to achieve this hybrid balance.

3. We will see further growth in digitization and automation.

As organizations are faced with slower growth and a competitive labor market, they are turning to technology to help them lower costs and attract talent. Employees want to work with modern technology, so investing in up-to-date technology, in turn, supports employee growth and retention. The best way to achieve this is by streamlining and automating lower-value, manual tasks, which improve both customer and employee experiences. Saving employees time by automating manual tasks can provide increased opportunity for high-value, face-to-face customer interactions.

“Every financial institution is trying to balance risk and reward, while growing as much as they can,” says Glover. “Even in this recessionary environment, if growth slows, they still are going to need to balance risk and reward. They’re going to want to automate renewals so they can get a good grip of how their credit portfolio is doing, and they’re going to want their employees to have a great digital experience so they can continue to compete for the best talent.”

4. ESG will drive executives towards action.

Customers are demanding companies publicly commit to ESG business standards and principles. Rather than putting forth genuine effort into green practices, some organization simply leverage PR and marketing to persuade consumers their practices are environmentally friendly, referred to as “greenwashing”.

It is expected that in the coming year, public companies will be asked to report on ESG imperatives like carbon emission. Such reports could result in brand damage or even penalties, as regulators begin investigate companies for greenwashing. Organizations, including financial institutions, must invest now in resources and systems that can help track their progress on these initiatives.

5. Meeting the needs of Small and Medium Enterprises (SMEs) will be a key differentiator.

Along with COVID came a rise in filings of LLCs and other business formation documents as more and more entrepreneurs and solopreneurs look to build their own businesses. However, the accessibility of capital to small business owners has often been arduous, complex and painful, which can have a greater impact on communities of color. “The ability to offer easier access to capital when needed, and at a risk appetite that bankers are willing to accept, will be a balance that banks will need to maintain,” says Zedrick Applin, nCino’s Diversity, Equity, Inclusion and Community Lead.

6. Maximizing security and trust in financial institutions will be a top priority for APAC.

In the APAC market, security measures will continue to see heavy investment in 2023 given the increasing number of high-profile cybersecurity attacks in Australia and other parts of the region. Because of the frequency of these attacks, new laws have taken effect that saw a dramatic increase in fines for breaches. A recent report by KBI.Media stated an attack is reported every 7 minutes. Customers will need to regain trust in organizations to protect their personal data. To achieve this, financial institutions will continue to prioritize maximizing security and protecting their customers’ information.

7. There will be an increased demand for sound financial literacy education, especially from Gen Z.

Thanks in part to popular influencer platforms such as TikTok and YouTube, Gen Z are beginning to make financial choices and decisions earlier in their lifetimes. Zedrick Applin predicts: “Setting up investment accounts, IRAs, trust accounts, and other financial protection vehicles will be crucial as bankers begin to interact with a newer population of individuals that typically do not have these type of accounts—especially communities of color.” Bankers will need to develop and expand their digital footprint to make these activities easier and more accessible for everyone.

There is no doubt that the coming year will present a plethora of unique challenges. The good news is that your financial institution doesn’t have to face it alone. To learn more about how a partnership with nCino can help your organization gain a competitive edge in 2023 and beyond, schedule a demo now.