Banks and credit unions have been in turmoil since 2020. The pandemic-driven hardships and evolving member expectations were exacerbated by growing competition in the industry, particularly from fintech companies.
In the light of these challenges, banks and credit unions need to stay ahead of the ongoing trends and adopt modern practices to remain current and relevant.
Key Challenges for Banks and Credit Unions in 2022
Narrowing Profitability and Revenue
Banks and credit unions are being dragged down due to a persisting revenue recession. Net interest margins are significant revenue drivers for banks and credit unions. But over the last few years, net interest margins have declined or stabilized.
Banks’ market share in lending is slipping due to high competition from different players in different categories. For instance, fintech companies and non-financial services platforms are giving tough competition to banks in the mortgage business. Per Wall Street Journal, “Americans took out more mortgages than ever before in 2020. Most of them didn’t come from banks.” Also, buy now, pay later services are cornering credit unions from the market.
Declining Non-Interest Income
Non-interest income includes various types of fees charged by banks and credit unions. However, due to challenges like growing competition from fintech and non-financial service providers and evolving regulatory requirements, non-interest incomes are also showing a downtrend.
Major Priorities for Banks and Credit Unions
To swiftly tackle these challenges and reclaim their positions, banks and credit unions need to realign their priorities and strategize accordingly. Banks and credit unions must realize the emerging growth opportunities, accelerate their digital transformation initiatives, and modernize their loan origination to gain a competitive advantage and be future-ready.
This will help them make a sharp recovery from an industry-wide recession, utilize pandemic-induced deposits, and reap the benefits of digital transformation investments.
Webinar: Hot Trends in Technology and Lending for 2022
For highlighting these trends, challenges, and priorities, we recently hosted a webinar titled ‘Hot Trends in Technology and Lending for 2022’ with Alex Johnson (Director of Fintech Research, Cornerstone Advisors).
The webinar featured new research from Cornerstone Advisors on bank and credit union executives’ technology and lending priorities for the upcoming year. The webinar reflected the challenges, current threats, and priorities for banks and credit unions and highlighted important technologies that financial institutes can invest in this year.
Watch the webinar recording and gain detailed insights into trends in technology and lending for 2022.