03 August 2023
Buckle up bankers, it’s going to be a bumpy ride.
Bank collapses, venture capital pullbacks, consumer uncertainty, and rising interest rates have exacerbated existing challenges caused by evolving customer expectations, burdensome regulatory requirements, and increasing competition from fintechs.
Add to that list a series of internal struggles like risk aversion, bureaucracy, and technology that no longer meets market needs, and senior bank technology buyers have faced a challenging start to 2023, and there are still five months to go.
The long-term impact of macro-economic pressures on consumer and business confidence in banks is still unknown, but there are a few significant trends that can be expected in the short term. These include a race for deposits, a race for new customers, a splitting of deposits across multiple accounts and institutions, and a period of introspection as banks make sure that they have their own houses — and their balance sheets — in order.
If you are a fintech or vendor with a tough H2 revenue target, or are starting to think about your 2024 pipeline, senior bank decision makers are very clear: regardless of the economic cycle, banking leaders are still expected to deliver growth. Metia’s ‘Shine Brightly, Sell More’ report showed that these senior bank technology buyers have some very clear priorities.
The report identified that the bank technology buyer’s mantra for the remainder of 2023 is: Help me do more with less. Here we examine how fintechs and tech vendors can align to that priority. We highlight five insights from the report that all tech vendors and fintechs should focus upon in order to effectively sell to, and partner with, banks in the current economic cycle.
1. 2023 demands rapid competitive innovation despite challenging budgets
Neo banks are maturing fast. For example, Chime has 13 million customers in the US, and 7 million of them consider Chime to be their primary financial institution. Accenture estimates that fintech-driven changes in consumer payments preferences could result in traditional banks losing out on $89 billion in revenue in the next three years, and the growth of embedded finance will continue to disrupt the income of the financial intuitions that don’t evolve. Innovation is imperative and banks are seeking fintech partners to help get it done.
2. Effective innovation requires deep insight into customer and market needs
Banks are under pressure to better understand their customers and marketplaces, both from a marketing and a regulatory perspective. Personalizing customer experiences, effective highly target marketing engagement, and well-researched product offerings are the main tenets of successful growth in challenging times.
3. Increased regulatory burden in 2023 is inevitable and banks are already struggling
Senior bank decision-makers are 1.5 times more likely to be worried about data protection and 1.2 times more likely to be worried about regulatory compliance. Now, regulators around the world have signaled that recent market events require tighter regulation and increased supervision. Banks are prioritizing finding new solutions and fintech partners to share the burden.
4. The current economic climate is threatening sales targets and profitability goals
Senior bank decision-makers are concerned that they’re still expected to hit targets despite a turbulent economic environment. Interestingly, pressure to reduce costs doesn’t make it into their top five current financial pressures, which means that senior bank buyers are currently more focused on driving profitable outcomes rather than cutting costs. This is an opportunity to think about the changing environment as an opportunity to do things differently rather than a requirement to do less.
5. Taking these challenges into consideration, will senior bank decision-makers simply try to survive, or will they invest to thrive?
Senior banking BDMs face a dilemma. They know they need to scale and innovate but they’re 1.9 times more likely to be concerned about long-term funding of their institution, which will inevitably be a psychological barrier to approaching decisions with a growth mindset. This means that vendors and fintechs offering step-by-step innovations, clear and short-term pathways to positive outcomes (e.g. cost reductions, improved efficiency, and competitive advantage) will be priority choices in 2023.
Regardless of size or geography, the economic outlook for 2023 is forcing financial institutions to be creative about competing for customers, deposits, and the opportunity to lend, despite reduced budgets and conflicting priorities. Success for fintechs and tech vendors lies in how well they position themselves to solve those challenges.
Are you interested in more data around financial attitudes, behaviors and trends to sharpen your 2023 H2 sales and marketing plan?
To learn more about how we use digital data, data science and market research to create scientifically resonant, compelling marketing, content, and brand stories for banks, credit unions and fintech, contact firstname.lastname@example.org