New regulations regarding customer data sharing are coming. Based on customer consent, banks will be obligated to share financial information with other institutions through an API interface. While the implementation of these rules is likely a year or two out, banks and credit unions should begin factoring this requirement into their planning. This won’t be an issue for companies that have implemented BaaS. For those that haven’t, now would be a good time to start exploring possible partnerships to help create the necessary open API interfaces.
Many companies continue to face digital transformation challenges as we roll into 2023. Cultural resistance to change is one of the biggest and most intractable ones. Along with limited resources for investment. Not to mention challenges with legacy systems, data and security concerns, and the ongoing focus on staying current with changing regulations. Then there’s the need to keep an eye on trends related to mobile adoption, maintaining effective customer engagement, the adoption of AI/machine learning applications, cloud computing, workforce changes, and a host of other emerging technologies. This is all on top of the day-to-day management of the company and the need to maintain a reasonable level of financial performance during a period of economic volatility.
Customers, investors, and employees want to see businesses contribute to making society more sustainable. This will make ESG and sustainability key goals of forward-thinking companies in 2023. Challenges include maintaining an ESG budget during a recession and achieving transparency given the lack of agreement on reporting standards. It’s also essential that Board members (the Governance component in ESG) fully understand the company’s climate risk strategy. Also of importance are the social factors underlying the company’s strategy that contribute to making the “S” in ESG more measurable and quantifiable.
The benefits of real-time payments will be magnified given the impending recession. Cash flow will be increasingly important to business, making the speedy receipt of payments and precise management of payment outflows larger considerations for a company when selecting a service provider. Many fintech providers understand this and look to payments as a way to differentiate from traditional banks that are slower to the RTP game.
