The commercial banking industry is moving further into digital banking ecosystems alongside the broader banking and financial sector. As the growing adoption of digital solutions continues to rapidly expand, commercial banks must consider how to stay ahead of competitors.
Technology-based trends such as artificial intelligence, omnichannel strategies, and open banking are reshaping how commercial banks interact with and service clients both large and small. To become truly competitive, these banks must work to embrace these trends and enter into a more connected banking ecosystem.
In this article, we discuss the state of commercial banking in 2022, as well as growth and technology trends to watch in the coming years.
Keep reading to learn about the top three technology trends for commercial banks in 2022.
The State of Commercial Banking in 2022 & Growth Trends to Watch
Economic headwinds around the globe are presenting commercial banking businesses with challenges to both meeting client needs and maintaining operational efficiency.
Despite business hurdles presented by the current economic downturn and rising inflation rates, the global commercial banking industry is still expected to experience growth from 2022 to 2031.
According to Allied Market Research, the global commercial banking industry reached an estimated value of $2,540.3 billion in 2021. By 2031, the industry is projected to reach a value of $7,404.4 billion by 2031 with a compound annual growth rate (CAGR) of 11.5% over the forecast period.
Previously, the commercial lending and healthcare segments dominated the market as of 2021. However, the report further states that the project finance segment is expected to be the biggest contributor to the commercial banking industry, accounting for approximately one-fifth of the market share.
Additionally, the report sets high expectations for both the healthcare segment and the transportation and logistics segments, with the latter projected to experience the fastest CAGR in the industry at 14.2%.
Recently, Deloitte published the 2023 Banking and Capital Markets Outlook. In this report, Deloitte states that commercial banking clients are demanding “bespoke digital, data-rich solutions, and tailored advice,” and that banks hoping to remain competitive must embrace this new client service model.
This report further states:
“Commercial banks should redesign their data architecture to bolster data quality and improve data access, freeing the data that is currently compartmentalized in organizational silos. Moreover, collaboration between commercial banking, data, and technology units could usher a deeper, cultural shift in the organization; it could transform data into a strategic asset that generates actionable insights.”
3 Key Commercial Banking Trends for Maintaining Competitivity in 2022
Keeping in mind the growth trends and evolving client demands discussed above, the top trends for commercial banks to embrace largely center around technologies that enable efficient use of advanced data and data analytics models.
Let’s take a look at three key technology trends that can help commercial banks achieve this:
1. Artificial Intelligence (AI) & Machine Learning
Artificial intelligence and machine learning continue to play an evolving vital role in the digital transformation of the commercial banking industry.
According to McKinsey & Company’s report Building the AI Bank of the Future, AI technologies can help banks meet the challenge of rising digital expectations in three key ways:
- Boosted Revenues: AI empowers banks to boost revenues by offering clients a wider range of personalized services that meet their exact unique needs.
- Lower Costs: By reducing errors, generating higher automation, and allowing better utilization of resources, AI helps banks to lower operational costs.
- New & Unrealized Opportunities: Through the use of AI, banks can make better sense of large quantities and troves of data, enabling the realization of new opportunities via improved data processing and generation of insights.
2. Omnichannel Customer Strategies
With commercial banks working to bolster their AI-powered offerings, an omnichannel strategy is needed to both offer clients their preferred methods of accessing services and improve the bank’s access to new groups and segments of clientele.
According to Chase’s 2022 Digital Banking Trends report, omnichannel experiences are essential for bridging the gap between physical and digital banking experiences. Additionally, omnichannel provides banks with the opportunity to develop self-service portals that place greater power into the client’s hands, meeting the growing demand for increased client control over accounts.
The report further remarks on the growing relationship between omnichannel strategies and AI, as AI and machine learning — as well as biometrics — can help boost the efficiency of customer authentication for clients arriving through digital channels.
3. Open Banking
As the broader global banking industry works to fortify itself against economic headwinds, the need for connected and collaborative banking systems is growing more crucial.
Open banking is considered by many to be the future of finance, offering financial institutions in all sectors to securely share customer and banking data via APIs with the explicit consent of the customers.
While open banking has long been championed by the retail banking sector, commercial banks are becoming more aware of the potential corporate advantages of the banking model.
In a 2018 Accenture survey of 660 commercial banking customers, 40% of large corporate clients and 31% of small businesses reported participating in open banking ecosystems. A more recent 2022 report from Accenture reveals that commercial banks are now working to gain a more competitive edge through digital portals that embrace open banking and embedded third-party services.
Overall, open banking goes hand-in-hand with the AI and omnichannel trends discussed above. With larger troves of customer and client data available through AI-powered data insights and omnichannel strategies, an open banking approach for commercial banks is the next step towards becoming highly competitive in the digital era of finance.
Final Thoughts: Implement Commercial Banking Technologies with CPQi
For commercial banks to meet the challenge of technological innovation, all while staying above water in times of economic turmoil, a trustworthy FinTech partner is needed.
At CPQi, our team has decades of experience implementing innovative technologies that include AI, omnichannel strategies, and open banking systems. With deep knowledge of the commercial banking sector, our consultants can help your institution develop a custom strategy that meets your unique needs.
To get started with CPQi, contact our team today.
