Staffing Challenges, Regulation for Digital Assets and the Metaverse are Some of Fintech’s 2023 Trends
SRM (Strategic Resource Management), an independent advisory firm serving financial institutions and other industries across North America and Europe, recently shared commentary on the trends it predicts will make the most-significant impacts in 2023.
Staffing challenges will persist. Financial institutions must have comprehensive plans for retaining and attracting revenue producers when there is upward pressure on wages. They must emphasize company culture and employee engagement programs for effective employee retention. Investments in professional development are critical for institutions to have a happy, fulfilled staff.
Institutions must have a deeper awareness and understanding of the fintech market. Even if they’re not making investments right away, banks and credit unions must allocate funds to research what strategies are available, meet with providers, and assess whether it makes sense to collaborate with tech or pursue investments.
A battle for deposits has begun. Competition for deposits will be a significant focus for banks and credit unions in 2023, forcing many to use tried-and-true methods and new approaches to ensure depositors stay in the fold. Deposits provide critical, low-cost, and, hopefully, stable funding for loans. They also offer an entry point for promoting loans and fee-based products, and services. Pricing strategies, segmentation, employee training, and marketing will be critical to success.
Digital assets will become more prevalent. More regulation is coming for digital assets, which will create clearer rules of the road. The recent implosion of big-name crypto firms could present an opportunity for trusted financial institutions such as banks and credit unions - but they must do their homework before diving in. Remember that adequate technology and infrastructure are more relevant than fluctuating coin values. Now is the time for banks and credit unions to budget for due diligence, even if they don’t have any immediate plans to offer digital asset services. Digital mapping should be considered to set up the capabilities necessary for adding the technology when the institution is ready.
ITMs are rising in popularity. While many institutions are closing and consolidating branches, they still need to meet the needs of specific customer segments while managing complex, high-value transactions. Interactive Teller Machines (ITMs) are a great way to fill this gap.
According to the American Bankers Association, the typical ITM can cost $55,000 to $80,000, excluding one-time infrastructure costs ranging from $250,000 to $500,000. Still, financial institutions can potentially cover their cost outlay many times over - if they properly educate and market to customers.
Banks and credit unions will pay closer attention to the enormous opportunity the metaverse provides. JPMorgan Chase and HSBC have dipped their toes into the metaverse, and more institutions will likely follow in 2023. The metaverse runs on the exchange of goods and services, and we expect more developments around the financial infrastructure in the coming months. Users need safe, accessible forms of payment and asset storing in the metaverse - that’s where banks and credit unions can demonstrate their value and utility.
“Budgeting has become significantly more complex for banks and credit unions, as there are an increasing number of new technologies, products, and services for them to consider,” said Paul Davis, Director of Market Intelligence at SRM.
“This year, the most successful institutions will focus on what will most effectively help them attract and retain customers. Fintech, ITMs, and AI are three areas that hold a lot of promise, so institutions that consider these expenditures must understand the long-term ROI they provide to ensure tech will support their organization’s visions and goals well,” Davis added.
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