Insider Intelligence highlighted four main banking trends that will emerge in 2023 to help customers weather the economic storms
Image: shutterstock.com
The new Banking Trends to Watch for 2023 report from Insider Intelligence revealed its predictions for the trends shaping the modern banking industry.
Gen Z will be the main target audience
The study predicts that Gen Z will be the main focus demographic for banks and financial institutions this year. Although half of them will already be adults in 2023, banks should also not forget about the younger half of the cohort, creating banking products for youth to drive brand loyalty as early as possible.
In addition, banks will adapt their social media strategies to attract Gen Z through popular short-video channels that those consumers already consult for financial advice. We have previously reported that 40% of young people aged 18-24 who follow social media finance channels say that influencers give better advice than traditional media. Banks would have to try hard to change that perception.
Privacy controls become an utmost priority
Financial institutions that prioritized consumer data protection in 2022 have gained consumer trust and become much more competitive. Therefore, all the industry players will predictably strive for data protection excellency this year.
The firms which previously lagged behind will spend time and energy on new privacy-focused products and services. This would be especially important since half of the top US banks already allow consumers to manage third-party data access to financial information via mobile.
Neobanks would have to double their efforts or lose the edge
Neobanks have lost their novelty lately. Besides, they saw decreased funding in 2022 since investors favored profitability over growth.
Therefore, the report predicts neobanks will cut costs and turn to new sources of revenue, like lending and credit cards, to reach profitability this year. Otherwise, the challengers risk being snatched up by fintechs, incumbent banks, or other neobanks.
Embedded finance will see new opportunities but challenges rise too
This year, Insider Intelligence expects new segments of embedded finance, like embedded lending, to grow catering for the growing demand in consumer borrowing. However, banking as a service will struggle as interchange fees diminish with the economic slowdown.
Therefore, incumbent banks will focus on white-label credit cards as a service, well-funded fintechs will develop full-stack embedded finance platforms, while other fintechs will tap into low-code and no-code solutions for payments, lending, and deposits.
SEE ALSO:
UK Banks Develop Shared Banking Hubs Network
