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.
