Global rate hikes challenge banking. According to an Accenture report this year, banks “will be affected by the return of positive interest rates: deposit accounts will feed the sector again and balance sheets will once again be important. This year will not be without surprises and revolutions”. The consulting firm develops the ten keys that will underpin this year’s business.
product innovation
Rising rates will drive product innovation. “The banks likely to do best will be those with a comprehensive, deposit-oriented offering that generates the greatest benefits by addressing the totality of each customer’s needs.”
The rebirth of the branch
The pandemic has spurred digitization and led consumers to become more self-reliant, but at the same time it has eroded the differentiation between each bank and generally made banking much less personalized. “This year, banks will once again invite customers to their branches and welcome them into their homes. More importantly, they will shift their focus from meeting specific needs and selling products to caring for their customers’ overall financial well-being.”
The Metaverse is demystified
Some analysts predict that the market generated by the metaverse could grow to $8 trillion in just eight years. If this is true, the metaverse will be one of the biggest trends in banking. Rapper Snoop Dogg bought land and built a virtual mansion on the Sandbox platform, after which a fan bought nearby land for around $450,000. The question for the bankers is, would they lend that $450,000? would you insure the property?
Adapt structures
Rigid banking structures collide with employees who want to work in fluid teams. “Successful banking firms will rethink their traditional vertical hierarchies and experiment with cross-functional teams where expertise prevails.”
Risk is everywhere
The world is facing geopolitical and climate instability, energy shortages and soaring inflation. The world of cryptocurrencies has collapsed. With rising rates and a looming recession, analysts are once again predicting that insolvencies will increase and strain bank balance sheets.
Data becomes a product
Data should be viewed as the oxygen that fuels every bank’s action. “The data must have owners who identify and define use cases, cleanse the data and establish the structures that allow the different teams and systems in all parts of the bank to access it.”
The new role of fintechs
In the third quarter of 2022, private company financing and acquisitions worldwide were down 73% from their peak in the third quarter of 2021. One of the main reasons for this decline is the rising cost of borrowing.
“So far only digital banks have survived on the fringes of profitability, often supported by venture capital investments. While fintechs may become less of a direct threat, banks shouldn’t rest on their laurels. Startups will continue to innovate and, as industry enablers, will enable traditional competitors to improve their offerings.”
A realistic approach to the green economy
Most banks have responded positively to its role in reducing greenhouse gas emissions. However, “the transition to a Net Zero economy is an uncertain undertaking that is fraught with risks that banks should normally avoid. A more realistic approach to financing a green economy would be to look beyond the banking sector towards an ambitious public-private partnership.
Solutions for every context
“In 2023, banks will work to better understand the different forces that shape customers’ lives and offer solutions that best fit their individual contexts. Banks that take this approach will be well positioned to thrive.”
A change of mind
2023 will be the turning point for the technological modernization of the banking core business. “The balance of pros and cons has been shifting for years; now is when we will reach the tipping point,” says Accenture.
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Source: Clarin
