Over the last decade, especially after 2008, the banking industry has shown significant growth. In 2022 alone, the total global assets were increased by 3.79%, reaching $154,211 billion. This means we are moving forward to a healthier financial sector.
However, it is not all sunshine and rainbows. When we talk about banking, we want to focus on the business banking sector, since it is the main sector that powers the economy.
So, how is the business banking sector operating in the middle of a financial crisis? Do technologies impact how businesses interact with banks? And what’s the future of the business banking sector?
Let’s find out.
The Current Economic Situation
First off, the global economy is like that awkward dance at a wedding; some are doing the slow shuffle, while others are attempting a high-energy jive.
Advanced economies, such as the US and Euro area, are expected to see modest growth rates of around 1.4%, while emerging markets, with India leading the charge at a 6.3% growth rate, are the only country that shares a beacon of optimism.
To be fair, since we live in a slowed-down economy, with not a lot of spending, and a banking crisis that happened a year ago, the current state of the banking sector seems surprisingly stable.
Central banks, in their role as managing this economic party, are tweaking the volume knobs of monetary policies.
Interest rates, after having skyrocketed, are expected to either stabilize or, in some cases, take a slight dip as we move through 2024. The decrease in the interest rates that most experts think is coming in a couple of months will have a significant boost to the economy.
Why? – Well because businesses will be able to borrow money cheaper, and therefore invest in growing a capital that will contribute to the country’s GDP.
However, don’t expect the music to stop; the global inflation rate, albeit slowing, continues to challenge the tempo set by central banks.
Technological Tsunami
On the tech front, we’re surfing on the edge of a colossal wave. Artificial Intelligence (AI) is leading the charge, expected to boost bank productivity by 20-30% and revenues by approximately 6%.
It’s like having a robot butler who not only manages your finances but also cracks jokes about the stock market.
On the other hand, we have digital banks that are revolutionizing the way businesses operate. With platforms like Genome business banking, companies can open an account, get a business card, pay everything online and even track their expenses and profits.
Online baking is definitely one of the shining spots in the status of the industry today and has the potential to increase the value of the global economy by enabling international business operations.
Open banking is another guest at the party, breaking down walls and allowing banks to play nicely with third-party services. It’s the financial equivalent of open marriage but for your bank account, fostering innovation and offering consumers more tailored services.
In other words, you can link your bank account to budgeting software, and with the use of AI, you have your own personal super-accountant.
Hyper-personalized banking is turning heads too, aiming to provide a banking experience as unique as your coffee order. Gone are the days of one-size-fits-all banking; welcome to the era where your bank knows you better than your barista.
In fact, online banks were one of the first ones to adapt this hyper-personalized banking for businesses. This allowed for building unique platforms, software, and tailor-made apps that will benefit businesses.
Cybersecurity
No party is complete without an uninvited guest, and in the banking sector, that’s a cybersecurity threat.
Ransomware continues to be the obnoxious crasher, locking banks and their customers out of critical data unless a ransom is paid. Banks are also wrestling with emerging tech vulnerabilities, cloud misconfigurations, and the ever-present threat of insider malfeasance.
To combat these risks, banks are deploying an arsenal that includes enhanced monitoring, rigorous risk assessments, robust encryption, and stringent access management. It’s the digital equivalent of hiring bouncers for the party, ensuring that only the right guests make it through the door.
Business Banking Trends
Digital banking, particularly mobile and online banking, has become increasingly central to the industry. The demand for mobile banking has skyrocketed, with a significant portion of consumers considering mobile capabilities a critical factor when choosing a bank.
This shift towards digital platforms is driven by consumer expectations for convenience and efficiency, compelling banks to innovate and offer advanced features beyond basic mobile app functionalities.
Final Words
So, the current situation of the business banking sector is surprisingly healthy! We have new technological innovations that will change the industry for the better, we have the lowering of the interest rates that will expedite the economy, and lastly, we have start-up company innovators that are modernizing the business banking sector.
Now, it is all up to the businesses. If you are a business owner, make sure to leverage all the technological advancements and keep an eye on the future.
