Economic volatility, unpredictable deposit flight and widespread consumer anxiety have presented community banks and credit unions with unique challenges this year. As we enter 2024, institutions are determining how to serve their changing customer base while optimizing margins and keeping up with technological advances. NCR Voyix identified the following trends to watch as we prepare for a new year. Community institutions will prioritize financial fitness initiatives. Top-of-mind issues for consumers include inflation, loan interest rates and rising cost of living, not to mention—the resumption of student loan payments, an added financial burden that recently reemerged. Many will feel the stress of these compounding factors next year, and increased defaults are expected. The banks and credit unions that are taking steps now to prioritize financial wellness programs and options for their customers and members will be best positioned to support their communities and earn back trust. This is especially crucial as younger generations—millennials, Gen Z and Gen Alpha—determine where their loyalty lies. Those that can use data to personalize financial fitness and offer helpful resources will be best positioned for success. Payments take center stage. As money movement options continue to multiply, from mobile wallets to real-time payments and FedNow, banks and credit unions will be tasked with how to optimally enable choice. Not all institutions can and should implement different innovations right away, but they should have a strategy and plan for which payments methods are most important for their institution’s unique risk profile and customer base. Looking for ways to provide immediate value based on real use cases is critical to success. Those that are able to deliver flexibility for how to pay and get paid (especially when it comes to business payments) will come out ahead. More AI use cases will emerge. While both the hype and hesitations around generative AI are sure to continue into next year, real AI-powered use cases will materialize across the institution. AI has the power to optimize efficiencies and more effectively analyze data enterprise wide. People will not be replaced but augmented and empowered to refocus efforts on more growth-focused customer advisory and strategic activities. Much like with payments, the urgency isn’t so much around immediate implementation but on developing a solid strategy backed by data and based on the needs of the institution and community it serves. Gig work gains momentum—and causes issues. As more Gen Zers show a preference toward being their own boss and economic difficulties force people to take extra steps to make ends meet, gig work is seeing a significant uptick. However, these side hustles often come with financial intricacies or limitations that go unnoticed until an issue arises, such as 1099s, lack of medical coverage, no retirement savings plans, etc. More banks and credit unions will determine where they can step in and support these gig workers, helping them embrace work the way they want while still carving out a strong financial future. This is another area where community banks and credit unions can forge lasting trust, especially with younger generations. Branches remain the elephant in the boardroom. As community institutions look to cut costs and digital adoption rises, the branch’s purpose and relevance will continue to be called into question. However, branches remain a foothold across communities, and the most profitable and meaningful interactions still typically take place in the branch. However, banks and credit unions will continue seeking ways to digitally optimize branch interactions, reducing costs and complexities and automating routine interactions to save tellers time for developing relationships. It’s not branch or digital but branch and digital, which is why enabling connected experiences that can cross the channels (such as during the account opening process) will be so critical. “Even though many of the challenges experienced in 2023 will likely linger in the new year, community banks and credit unions across the country are taking steps to invest in the strategies and technology necessary to better serve their customers and members and compete,” said Douglas Brown, president of digital banking for NCR Voyix. “Those who embrace digital-first banking, which encourages innovation and the use of data to personalize all interactions regardless of channel, will find themselves taking back and solidifying trust, which continues to be the most critical factor when it comes to customer loyalty and success.”
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Author: Mike LawsonMarried to a most gorgeous and wonderful wife, raising 5 kiddos (including twins!), enjoy helping others tell their stories, and love surfing SoCal waves. Keep it simple. Archives
May 2024
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