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Commercial banking top trends for 2024

The report “Commercial Banking Trends 2024” delves into the key trends and challenges that commercial banks are expected to face in the year ahead. The trends are categorized into two major themes: focusing on operational and regulatory fundamentals and embracing technological advances for a different future.

In terms of operational and regulatory fundamentals, commercial banks are preparing for economic uncertainty by striving for operational excellence in areas such as cost transformation, deposits, and regulatory compliance. Strategic cost management is highlighted as a top priority, with banks focusing on long-term programs to optimize costs across various aspects of their operations. This includes a shift towards continuous optimization rather than short-term cost-cutting tactics. IT spending is identified as a key lever for cost optimization, with leading banks exploring transformative projects to enhance operational efficiency and drive strategic initiatives.

Regulatory changes, such as Basel IV, are expected to impact how banks allocate capital, choose markets to operate in, and price products. Banks will need to optimize processes, pricing, and portfolio compositions to adapt to the new prudential landscape and meet stricter regulatory requirements. Additionally, ESG concerns are becoming increasingly important in financial services regulation, with banks needing to refine their product and portfolio offerings in line with ESG roadmaps to attract capital and reduce funding costs.

On the technological front, advancements such as generative AI are enabling commercial banks to streamline sales, tailor products to individual customers, and accelerate credit lifecycle management. Automation tools and richer data sources are transforming key loan origination processes, with opportunities to increase focus on unsecured lending products like invoice financing and receivable finance. Banks are also leveraging data, analytics, and AI to enhance profitability in lower-margin products and drive growth opportunities.

The report emphasizes the importance of embracing technology to reinvent business models and achieve a new performance frontier. Commercial banks are exploring innovative solutions at scale to develop value-added services and stay competitive in a rapidly evolving landscape. Trends such as commercial payments transformation, automated data-powered lending, and the integration of generative AI are highlighted as key areas of focus for banks looking to drive growth and enhance customer experiences.

In conclusion, the report paints a picture of commercial banks navigating a complex environment characterized by economic uncertainty, regulatory changes, and technological disruption. By prioritizing operational excellence, embracing technological innovation, and adapting to evolving regulatory requirements, commercial banks can position themselves for success in 2024 and beyond.

Download the report here.

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