SCOTTSDALE, Ariz.–New research released by Cornerstone Advisors has found the interest rate environment and cost of funds are community bank and credit union executives' greatest concerns for 2023.
The findings are included in the report What's Going On In Banking 2023: Fighting the Headwinds, Riding the Tailwinds, which was authored by Ron Shevlin, chief research officer at Cornerstone Advisors. According to the company, the report explores a wide range of banking industry trends, including new products, M&A, fintech, payments, digital transformation, and emerging (and submerging) technologies.
"Interest rates bumped last year's top concern of finding qualified talent down a notch or two in this study's ratings. But a more notable year-over-year change was the significant increase in the percentage of executives who mentioned cost of funds as a concern this year," Shevlin said. "That number climbed from less than 10% in 2022 to more than 40% in 2023."
Key Findings
According to Cornerstone, other key findings in the report include:
- Growing deposits will be a priority in 2023. Banks' concerns over small business deposits soared to 72% from 41% in 2022. For credit unions, retail deposits topped the list, skyrocketing from 18% in 2022 to 70% in 2023.
- Banks and credit unions remain “seemingly indifferent” to the revenue growth potential of real-time payments. Nearly 40% have not determined an RTP strategy.
- 72% of banks place a high priority on growing deposits from small businesses.
- Banks plan to invest nearly $4 million in fintech startups in 2023 (an increase of $1 million over 2022) while credit unions plan to invest just over $1 million (a slight decrease from 2022).
- 28% of banks plan to invest in/implement application programming interfaces (APIs) in 2023.
The Troublemakers
In releasing the findings, Cornerstone quoted Shevlin as saying this year's report is written primarily for the "troublemakers" in the industry, noting the company refers to “troublemakers” as “institutions that fight the headwinds and ride the tailwinds," he observed.
"They are forward-thinking in their use of technology, aggressively go after growth and market share, and they're unafraid to take on megabanks, upstart fintechs, and anyone else competing with them for mind and market share,” Cornerstone said.
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