Top priorities for financial institutions in 2023

Today’s financial institution customers are more demanding than ever before. With rising user experience expectations and the table stakes-status of speed and automation, financial institutions’ offerings must evolve to meet the changing expectations of their customers in 2023.

In their session at this year’s Deluxe Exchange, featuring Aite-Novarica Group’s Christine Barry and Deluxe’s Rick Scholz, the duo laid out the four key areas for banks to focus on in 2023: platform modernization, integration, automation and new tools.

Platform modernization

When looking at the overall IT priorities of banks, platform modernization in the top four areas.³ Platform modernizations refers to when banks are replacing legacy systems, or they may be trying to modernize their platforms so that they can start leveraging intelligent routing, or new capabilities, to pull information together. 

Integration

Barry explained that integration as key focus area is integration not only within the bank portal, but externally with some of the systems that corporate treasurers are using. For Enterprise Resource Planning (ERP) systems, automation is a big focus, and onboarding would also fall into that bucket.³

Automation

Heading into the rest of 2023, there's a lot of focus on improving automation, improving overall efficiency and speed. Barry shared automation will be another theme, as well as technology in general. “It's interesting because we're using technology so much in our daily or personal lives, were much more willing to adopt technology,” explained Barry. “When I think back to even five years ago, we would do studies and most business end users or corporate, they would say that they adopted technology once it became more mainstream.”³

“Using machine learning and AI in forecasting has seemed to hit the top of the desire chart as well as the top of the pain point chart in many companies,” added Scholz. “There’s a huge focus on forecasting and gaining insights and the impetus there, I think that falls on you, the financial institutions, because they’re predominantly looking for that information from you as the processor of their transactions.”³

New tools

“New tools” refers to the expansions beyond the typical banking products, so more of the fintech-type offerings. “We're starting to see, and we'll talk more about the fintech partnerships, but that's where new tools also come into play: money management tools, just creating access or easier access to data information for customers through dashboards, or new tools to offer them,” added Barry.³

Priorities by bank size 

According to a survey of Aite-Novarica Group’s corporate banking executive council members, meeting customer expectations remains a challenge. When asked “How well do you believe your bank’s digital treasury management/cash management experience compares to corporate customer expectations from a user experience standpoint,” 44% said their user experience falls short of their customers’ expectations, while only 12% said it exceeded their expectations.¹

Barry shared that financial institution customers are looking for persona-driven experiences and they want easy, seamless navigation. Some of the highest priorities for the Top 150 banks include payments modernization (45%), onboarding (45%) and building out APIs for use by corporate customers (40%)². Scholz noted the focus on API development is insightful, since this benefits both the FI and its customers, and “we’ve heard it frequently at FIs of all sizes.”³

Aite-Novarica’s industry data found similarities in the highest priorities of both large global banks (>$450 billion in assets) and super regional banks ($100 to $450 billion in assets)². Both large global banks and super regional banks are prioritizing customer-facing APIs, fintech partnerships, enhanced data exchange and payment modernization. Large global banks report a focus on integrated payables, while super regional banks added onboarding and enhanced liquidity management to their priority list².

Regional banks ($10 to $99 billion in assets) are similar in their priority lists: Onboarding, payment modernization, real-time payments and integrated payables remain a focus for the rest of 2023². Barry shares that a bank of this size can truly differentiate themselves with a lower focus on enhanced liquidity management, enhanced reporting and cashflow forecasting, and build out of APIs³.

Increasing move to fintech partnerships

When it comes to fintech partnerships, all bank sizes have partnership on their radar. In a recent Aite-Novarica Group survey, FIs shared the main reasons their organization works or plans to work with a fintech. “In my mind, these reasons to partner focus on automation and gains in efficiency,” added Scholz.³ The majority of banks in a Q3 2022 Aite-Novarica survey of large and midsize banks, at 68%, view more partnerships with fintechs as “important” or “extremely important” to their overall strategy⁴.

What are the top reasons for partnering with a fintech? Better or automated payment reconciliation (44%), followed by “more payment options,” “better functionality” and “access to real-time payments” (all at 42%).⁵ Of those surveyed, the majority (63%) of FIs are currently work with a fintech directly for cash management or payment services.⁵

Key takeaways for your 2023 strategy 

Using this guidance from industry analysts and research, your FI can learn how to adapt and leverage changes to the banking landscape in 2023. But what do these priorities mean for banks and can your FI get started?

Barry summarized with the following takeaways³:

• Your potential competitive landscape is growing and getting stronger
• Ensure your highest IT priorities align with both current and future client expectations, as well as competitor initiatives to maintain your leadership position
• Partner with fintechs when needed to broaden your FI’s capabilities and avoid disintermediation
• Evaluate the effectiveness of your sales team to ensure they have the right tools to effectively sell more technical products

Sources

1. Aite-Novarica Group Survey of Corporate Banking Executive Council Members, Q3 2022.

2. Aite-Novarica Group Corporate Banking Council Survey, Q1 2022.

3. Rick Scholz and Christine Barry, "Top Priorities for Financial Institutions in 2023." Recorded at Deluxe Exchange 2023, Phoenix, February 2023.

4. Aite-Novarica Group Survey of large and mid-size banks, Q3 2022.

5. Aite-Novarica Group Survey of 300 U.S. businesses, Q2 2022.