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Finance leaders reveal interest rates are driving business model changes
Consumer loans were the second highest area , with 63 % of respondents seeing profitability growth in 2022 and 73 % anticipating further growth in 2023 . Other common areas of profitability growth in 2022 included mortgage loans ( 51 %), deposits ( 61 %), small business loans ( 45 %) and credit cards ( 35 %).
Workforce shortages force institutions to evolve
S yntellis Performance Solutions , a leading provider of enterprise performance management software , data and intelligence solutions , has published its seventh annual CFO Outlook for Financial Institutions . The research has revealed that 90 % of finance professionals at banks , credit unions and other financial services institutions anticipate interest rate changes will be the biggest driver of business model adjustments throughout 2023 .
Syntellis ’ 2023 CFO Outlook for Financial Institutions draws on data from a survey of more than 100 finance leaders at banks , credit unions , farm credit associations and other financial institutions across the US and Canada . The report – which takes an in-depth look at current industry challenges , trends and priorities – also exposes that finance leaders believe overall portfolio growth ( 54 %), competitive landscape changes ( 34 %) and staffing / labour fluctuations ( 27 %) will be additional key drivers of business model changes in 2023 .
Key findings of the report include :
Loans drive consistent profitability , but non-interest income fluctuates
Despite the economic outlook , many institutions saw profits grow in key areas in 2022 and expect growth to continue in 2023 .
After suffering during the pandemic , demand for commercial loans is once again on the rise and projected to be a major source of profitable growth , with 80 % of respondents reporting growth in 2022 and 88 % expecting it to be a growth area in 2023 .
Labour shortages continue to impact all industries , including the financial services sector . Facing elevated competition for labour amid a limited pool of available workers , banks and credit unions are struggling to attract and retain employees with existing knowledge of their systems and processes . With 27 % of respondents identifying staffing and labour fluctuations as major drivers of business model changes in 2023 , many organisations are identifying ways to adapt .
To augment their staff in response to shortages , 89 % of respondents are cross-training existing staff members , while 38 % said they obtain services provided by their software vendor and 22 % bring in temporary resources .
Data is on the rise , but AI lags behind
In a sign of continued progress , 88 % of respondents said their institutions leverage financial and operational data to inform strategic decisions .
Those include 74 % who said they do so moderately well but could do more , and 14 % who said data is central to their strategies and they use it exceptionally well . Still , many financial institutions rely on outdated tools – 33 % of respondents said they use spreadsheets for budgeting and forecasting . �
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