July 14, 2024

Financial Services Trends in 2023



Published May 29, 2023, 2:20 a.m. by Bethany


What will the financial services landscape look like in 2023? This is the question that Simon-Kucher & Partners set out to answer in their report, “Trends Finance 2023.”

The report is based on a survey of over 500 executives from financial institutions around the world. The respondents were asked about their expectations for the future of the industry, specifically in the areas of regulation, technology, customer behavior, and business model innovation.

Here are some of the key findings from the report:

- Regulatory pressures will continue to mount on financial institutions. Respondents expect more stringent regulation in the areas of anti-money laundering (AML), know-your-customer (KYC), and data privacy.

- Technology will play an increasingly important role in financial services. In particular, respondents expect artificial intelligence (AI) and blockchain to have a major impact on the industry.

- Customer behavior is changing, and financial institutions must adapt. In particular, customers are becoming more comfortable with digital channels and are increasingly expecting personalized service.

- Business model innovation will be critical for success. Financial institutions must find new ways to generate revenue and improve efficiency.

These are just some of the highlights from the report. To learn more, download the full report here.

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2023 is going to be a dynamic year in financial services

with quite a few challenges. Let me call out two of them.

First, after a decade of low or  even negative interest rates,  

banks and FIs have to adjust to  a higher rate environment again.

And while this offers opportunities to increase  

margins, it definitely puts  pressure on lending volumes.

Second, the high inflation together with  the looming recession leads to increasing risk in  

the lending portfolio of many banks. They have to  carefully evaluate whom to lend to and how much.

So, even with higher rates,  the outlook on interest income  

is unclear. And therefore banks have  to make sure that they ensure stable  

income from fees. For example from  payments, advisory, or investments.

Despite a challenging environment,  there are plenty of opportunities  

for banks and other financial  institutions to grow in 2023.

Let me give you a couple of  examples in retail banking.

It could be a “help me save” app  

to grow deposits and help customers at the same  time, to put some money aside in difficult times.

It could be digital investment advice, to help  

clients navigate through volatile markets.

Or smart lending offers, especially  in the area of sustainability.

Across all business lines, growth can come from deepening customer relationships and improving  

cross-selling and 

a diligent focus on pricing to  protect income and avoid revenue leakage.

2023 will be all about focusing on customer  needs. Those Banks and FIs will thrive,  

who put themselves into the shoes of their clients.

Think about how you can prove yourself  as a true partner when times get rough.

How can you help your clients  to manage their financial lives  

better and to be make better financial decisions?

And remember: customers today  expect a hyper-personalized,  

digital experience that are simple and fuss-free.

Over the years, many banks and FIs have heavily invested into digital technology.

2023 is going to be about investing  in “digital growth capabilities”.

Think about dynamic pricing  engines for deposits and loans.  

Think about next best offer algorithms,  hybrid investment advice … everything on  

how technology can help you improve customer  experience, streamline processes,

and increase sales efficiency.

The good news is, we’re already helping our clients on a lot of those topics. For example,

realizing price increases,  especially in B2B, to tackle inflation,

developing new offers and monetization strategies, for example in the area of deposits,

needs-based customer segmentation, or customer loyalty and engagement,

increasing sales effectiveness, specifically in the digital area.

So whatever 2023 will hold for us, it’s for sure going to be another very exciting year for our FS teams.

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