2023 Trends for Community Banks and Credit Unions

As we head into a new year, changes to the market landscape and competition, industry regulation, and user behavior remain prevalent, forcing financial institutions to continuously innovate or be left behind. With 2023 around the corner, our team put together a list of top trends for community banks and credit unions to reference as they tune their product strategies for a competitive advantage. 

Make Data Your Greatest Asset

In recent years, data has been referred to as “the new oil” because of its incredible value. As more transactions are completed through remote banking channels, collecting data for use, not just for storage, will help community institutions learn more about their customers and members, and to deliver even more personalized experiences and services. Using intuitive and data-backed solutions, banks and credit unions can enhance their use of data gathered to better identify trends in user behavior and to marry those needs with product roadmaps, educational tools, or specific promotions that further drive engagement, loyalty and bridge in-person banking with digital platforms. 

Press on with Digital Transformation Projects

Some may consider conserving their resources and limiting spending to withstand any potential economic changes in the new year, but investing in digital transformation should not be delayed. In fact, focusing on reducing manual processing and automating labor intensive workflows will save overhead and costs in the long run, across both the front and back-office. Replacing resource-heavy efforts with an electronic document and data management platform enables banks and credit unions to streamline processes and put the emphasis back on customer and member engagements. The internal and external efficiencies gained from these intelligent solutions are invaluable. Digital transformation is an ongoing endeavor, and banks and credit unions that continue to implement these capabilities will be in a stronger position to compete when the economy is back in the upswing.

Make Modernizing Legacy Infrastructure a High Priority

Payments modernization has been a slow transition for many institutions since Check 21 nearly 20 years ago – if it isn’t broken, why change?! But aging solutions and growing overhead costs, combined with new regulation, market demand for instant services, and new payment rails, will require community banks and credit unions to assess their existing solutions and adopt more agile, open platforms if they don't want to fall behind.

Open banking solutions and API-based capabilities provide financial institutions the ability to bring new products and services to market quicker and to save on costs with the ability to scale up or down as a result of updated architectures and modern tech-stacks. With real-time image and data validations, account holders benefit from enhanced and consistent user journeys, and third-party integrations are tighter for improved efficiencies. Community banks and credit unions should seek trusted software providers for solution refreshes to help guide them through discovery, implementation, and to develop a partnership for long-term success.

Pay Attention to the Open Banking Regulation on the Horizon

In addition to the above needs to modernize, banks and credit unions must pay attention to the anticipated "open banking rule" from the U.S. Consumer Financial Protection Bureau (CFPB). Aimed at boosting competition in the consumer financial services industry by making data more accessible, account holders would ultimately gain the flexibility to change institutions in search for more innovative experiences. 

Some banks and credit unions have started to develop their own APIs or to adopt a banking-as-a-service (BaaS) model as an initial open banking strategy, while others have looked at partnering with third-party solution providers to leverage their infrastructure through cloud-based platforms. Regardless of the approach taken, it will become increasingly important for all financial institutions to be prepared in the new year and to collaborate with trusted partners who understand the framework, along with its impact on other banking platforms.

Improve Services for SMBs

Like the everyday consumer, small-to-medium business (SMB) owners are looking to bank with institutions that can provide them with a convenient, secure, and engaging digital experience. Today depending on their size, SMBs may utilize a consumer banking platform if they find that dedicated business banking tools aren’t niche enough, while more established (small) businesses require features not available in these platforms, but find the offerings of larger institutions out of reach. 

A feature-rich and scalable business banking platform will be an important investment for community banks and credit unions looking to maintain loyalty and gain a competitive advantage with local account holders. With specific capabilities to help sustain their SMB, like cash management, payment capabilities, and integrated payroll features, as well as permission-based access, card controls, and real-time notifications, community institutions can reinforce their local impact with these business account holders.

Evolve Third-Party Partnerships

Fintechs will continue to emerge and with their ability to create competitive offerings will drive competition and force banks and credit unions to remain nimble.

While these third parties aren’t new to the market, community institutions should look to extend their collaborations, rather than to see the fintechs as pure competition. This co-collaborator partnership will allow banks and credit unions to leverage the agility of new technology and help them to launch new products at scale.

As you assess your institution’s goals and product strategies for 2023, the team at Alogent is ready to be your partner and help introduce the user-centric products and services your bank or credit union needs for long-term success.

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