SRM (Strategic Resource Management), an independent advisory firm serving financial institutions and other key industries, shares commentary on the top trends.
Mergers delayed due to the pandemic are now in full force. New data published by S&P Global shows M&A transactions pushed back due to COVID are not only pent-up in numbers but also getting bigger. And that is extending to regional and super-regional banks holding $10 billion to $1 trillion in assets. We expect to see even more mergers among these banks in the coming months and that will continue to impact competition in the marketplace. The creation of the Payments Leadership Council (PLC) has been monumental. This seems that this group is attempting to position for round two of the Durbin Amendment.
The digitalization of payments continues to progress with further mobile wallet developments. And that increases contactless payment and P2P usage. While consumer behavior continues to evolve, digital usage is steadying, and the digital revolution won. In a recent US consumer survey conducted by SRM, only 8% of respondents were new to doing their banking via digital channels. Virtual assistants are also beginning to gain more traction. On average, 1 in 5 respondents said they would prefer using a virtual assistant over using an app to do their banking.
Card networks are planning for post-pandemic consumer payments. Central Bank Digital Currencies (CBDC) continue to emerge, with organizations like the Chinese and European central banks disrupting the global payments landscape. These must be carefully launched. As there are many monetary policy objectives a CBDC must accommodate in its design. Institutions should dedicate resources to understanding the ins and outs of crypto, including non-fungible tokens (NFTs) and decentralized finance (DeFi).
Institutions are now recovering from the chaotic disruptions they faced during the pandemic. To achieve operational excellence in the post-pandemic environment, institutions must strategically rebuild these business models. Brad Downs, CEO of SRM, stated that the pandemic massively disrupted the financial services industry. But banks and credit unions showed great agility in this chaotic time. Now, with the world trending toward slowly opening back up, it is time to look forward and prepare for what’s next. Institutions need to keep adapting to new consumer preferences.
