2023 proved tough for financial institution (FI) leaders. As banks and credit unions faced mounting pressures due to inflation, regulatory considerations, and higher interest rates, it got more challenging to stay on course with technology investments. However, we believe bankers will find 2024 to be a much better environment, particularly if they act strategically to leverage the right partners and resources.
Here are a few things our Benchmark team members have seen in their crystal ball for the upcoming year:
“The banking industry faced significant challenges in executing larger projects, many of which were deferred to 2024 or strategically divided between the two years. With the surge in bank mergers, the need for hardware and services standardization became paramount, compelling financial institutions to seek comprehensive solutions. Recognizing the value of partnerships, banks are now actively engaging with companies offering full-service packages. These encompass everything from sourcing new equipment at competitive prices to providing repair options, facilitating installations and implementing buy-back programs for retired hardware.
An interesting trend observed in the past 12 months is banks’ and credit unions’ willingness to invest in refurbished hardware, marking a departure from traditional preferences. Looking ahead, the industry anticipates the continuation of mergers and acquisitions in 2024, emphasizing the importance of adaptability and collaboration. The spotlight on fraud prevention is set to intensify, with manufacturers actively developing innovative products geared towards safeguarding branches from emerging threats.”
Stephanie Johnson, Senior Account Executive
Deals are no longer based on price alone. Deals are based on how the tools fit a bank’s needs and if it is the right time to invest in the tech. During COVID, banks couldn't get their hands on enough equipment because they were setting up many different merchants or remote deposit capture and onboarding services. Over the past 12 months, banks have been looking to justify what they are buying and are more measured, especially with concerns over the economy. Additionally, banks see their core providers as their trusted advisors and rely on them to provide a full suite of solutions that fit the budget and the need.
Another driving factor will be mergers and acquisitions. I predict that there will be significant consolidation in the financial world, and we will see smaller banks selling to medium-sized banks and even medium-sized banks merging with larger banks. During a merger and acquisition, banks need assistance installing their hardware, converting their treasury management clients to new software, and other key functions. To meet our customers' needs, our managed device services offering will be key this year.”
Aaron Hodge, Senior Account Executive
“This year, we saw several bank mergers which put more emphasis on finding cost-effective solutions. Looking ahead to 2024, we anticipate helping more banks and credit unions onboard their newly acquired customers or branches to different technology platforms after a merger or acquisition. These projects are best handled by partners like Benchmark, with proven practices and processes.
Edie Davis, Senior Account Executive
“As we’ve seen from the challenges of 2023, it’s evident that the financial industry finds itself facing unprecedented pressure. The struggle to retain deposits, navigate stringent lending regulations, and cope with an overall reduction in IT spend has prompted a collective ‘tightening of the belt.’ Traditional banking, once a stalwart, is now yielding ground to private credit, reflecting a broader shift in the availability of credit. Branches, under financial stress, may witness an uptick in closures as the industry grapples with consolidations, depositors fleeing distressed institutions, and the impact of rapid interest rate hikes on loan activity. This environment marks a period of intense pressure reminiscent of the 2008 Global Financial Crisis, and the industry, far from being in growth mode, is witnessing an era of strategic consolidation.
The industry’s focus will remain on the essentials, with the first two quarters mirroring the challenges of the preceding year. Banks and credit unions will concentrate on digital enhancements, deposit retention and the provision of distinctive services to distinguish themselves in a highly competitive space. During this period of unpredictability, adaptability and strategic foresight will be vital for institutions.”
Lincoln Bramlage, Senior Account Executive
“Interest rates and economic uncertainty played key roles in whether a project will be approved or postponed, regardless of the need or want factor of a department or individual. Banks are still strong and technology-driven, but compliance, security and fraud are still at the top of the list. Secure transactions and the data that is manufactured and stored from that transaction must be secure and that is always a focus. I anticipate there will be a stronger need for managed device services in 2024. With mergers and acquisitions, branch conversions, and RDC conversions, FIs will need technical personnel to handle installations and customer service.”
Tim Wolfe, Senior Account Executive
“With the industry’s anticipated surge in mergers and acquisitions, there’s a strategic opportunity for the organizations involved to build a foundation for operational success. However, there is an ongoing labor shortage that has not only delayed or stalled branch transformation projects but has also made mergers and acquisitions more challenging.
In 2024, there will be a strong need for technology professionals to enable everything from seamless equipment installations and deinstallations to the efficient deployment of software and robust hardware support. The good news is that banks and credit unions can turn to managed device services partners to not only address the operational challenges associated with mergers and acquisitions but to also ensure that they have the technical resources to improve customer experiences and pursue other branch transformation projects. As the industry undergoes a period of significant change, our team is dedicated to empowering banks and credit unions with innovative solutions that set the benchmark for fintech excellency.”
Nikki Picklesimer, Senior Account Executive
“In the realm of retail banking technology, the relentless pressure from C-level management to contain costs and defer projects reflects the prevailing ambiguity surrounding commercial loan assets. A distinctive challenge lies in the fact that, unlike residential mortgages, banks directly hold these assets, introducing a layer of complexity to their valuation and significantly hindering merger and acquisition activity. The palpable risk associated with these assets has prompted a cautious approach, freezing strategic moves in the industry. Meanwhile, the landscape of IT spend within the sector is undergoing a notable shift, with compliance and security initiatives taking precedence. The ever-changing threat posed by hackers and data breaches has compelled banks to channel the majority of their IT projects towards fortifying these critical areas. Consequently, projects aimed at upgrading IT architecture are being deferred to 2024 and beyond. This dynamic underscores the delicate balance financial institutions must strike between innovation and risk mitigation in an environment where uncertainty reigns supreme, shaping the trajectory of the retail banking technology industry in the foreseeable future.”
Robert Haran, Senior Account Executive
Let’s Make 2024 a Success
In gearing up for 2024, it’s important to stay informed of industry trends; however, it’s even more important to have the capacity to respond rapidly to change. By working with Benchmark Technology Group, you gain the agility you need to pursue your goals and objectives, no matter what’s on the horizon. We understand the industry and your organization’s challenges and opportunities, and we can leverage our technology expertise and experience to deliver the outcomes you need.
Fintech solutions, customer expectations and the regulatory landscape have become even more complex, and it is an advantage to work with a partner who can move quickly on your behalf. For nearly 40 years, we have worked with financial institutions to migrate to new technologies and business models that provide best-in-class service and convenience. Whether implementing or upgrading branch automation solutions, executing a branch transformation strategy or fully managing help desk support or device fulfillment programs, Benchmark Technology Group can help your financial institution achieve its goals.
Don’t just take our word for it – read what some of our customers say about Benchmark. Please do not hesitate to reach out to any of our experts to find out how we can drive growth and productivity at your financial institution in 2024 and beyond.