by Darren Smith | Originally published by CUInsight
The financial services industry is constantly evolving. As we look ahead to 2024, banks and credit unions need to be prepared for several key trends and developments that will shape the industry. By planning ahead, financial institutions can position themselves to grow by staying ahead of the competition and continuing to provide great service.
About Branch Transformation…
Branch transformation has been one of the biggest shifts in recent years amidst the decline of traditional brick-and-mortar locations. As more services go digital and mobile banking usage grows, branches are becoming smaller and more focused on consultation services.
Experts expect this transformation to accelerate in 2024, with more branch closures and renovations to create smaller footprint, high-tech locations. With the increased usage of mobile banking, consumers are relying more on self-service and are more comfortable with technology. This allows banks and credit unions to leverage kiosks and video to continue delivering outstanding service despite ongoing staffing issues.
But financial institutions looking to make the most of this trend need digital transformation plans to enable seamless omnichannel services for account holders as physical branches continue a slow decline.
Staffing is Still a Problem
Like many industries, banks and credit unions are struggling with hiring, retention, and burnout. The Great Resignation has exacerbated already existing staffing issues. Financial institutions need robust recruitment and retention strategies, as well as a focus on culture, flexibility, and professional development opportunities to meet ongoing employment challenges. Outsourcing certain functions, like ATM management, and automating routine tasks can also help ease staffing pressures.
Interest Rate Increases Have an Impact
The Federal Reserve has been aggressively raising interest rates to curb inflation – pushing current rates above 8%. While higher interest rates are having the desired effect – slowing consumer cut back on spending, that’s not good news for banks and credit unions who rely on demand for mortgages and auto loans. As rates rise further in 2024, financial institutions may need to look at emphasizing deposit products and non-loan services. Small business accounts, additional business services, and collaborating with fintech partners can also help drive revenue as loan numbers dip.
Off-Premise and Remote ATMs are Important Touchpoints
Digital payment adoption has been rising. But cash remains important for many Americans – especially for younger generations and seniors. As inflation continues, many Gen Z and even Millennials are turning to hard currency to help them better budget and manage their expenses. However, branch closures are impacting cash and ATM access in some communities – directly affecting those turning to cash in these volatile financial times.
Placing off-premise and remote ATMs can help banks and credit unions continue to serve account holders – even in areas where a branch may not be viable. Advanced ATMs with expanded services may also help replace more costly branch locations and attract new account holders. And ATMs placed indoors, at local employee groups or with local retail establishments can help keep account holders safe while benefiting small business partners within the community.
ATM Security Upgrades Needs to be a Priority
ATM security is an ongoing priority, with PCI compliance and upgrades like Windows 11 migration hitting at the end of 2024. These changes are important as outdated operating systems increase the risks of cyber-attacks and revised encryption keys help keep criminals from accessing consumer data. In 2024 banks and credit unions will need security roadmaps that cover ATM hardware and software upgrades, security patches, encryption, and anti-fraud tools.
Partnering with an ATM managed service provider can help streamline this security management. These businesses can take on the ownership and responsibility for at-risk aspects of ATM operations – including compliance, equipment, software, maintenance, and processing. Without these concerns, banks and credit unions can save time, effort, and money while still operating the type of ATM services consumers expect.
AI Takes Finance by Storm
Artificial intelligence is creating opportunities for banks and credit unions to enhance services and efficiency. AI can power chatbots for customer service, personalize recommendations in digital channels, flag potential fraud, automate processes like loan approvals, and analyze data to provide a more informed strategy.
To stay ahead, banks and credit unions need to identify high-impact AI applications and either build or partner to create integrations with their core systems. Consulting with fintech partners and upskilling staff can help ease implementation and help an institution gain a competitive advantage.
No one knows for sure what 2024 will bring, but odds are the financial industry will continue its ongoing evolution. Banks and credit unions that prepare for key 2024 trends like branch and ATM transformations, cybersecurity risks, staffing concerns, and the growth of AI can optimize operations and consumer experiences. With strategic planning and innovative thinking, financial institutions can find new opportunities for growth and have a competitive edge headed into the new year.
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Darren Smith, Vice President, ATM Management
Craig Helmers, Vice President, ATM Management