The fallout from the Great Recession and the mountain of new regulations slapped on the banking industry following the financial meltdown of 2007-2008 continues to haunt institutions. Roughly a third of respondents said that driving growth and profitability was going to be their greatest challenge in 2016, a sign that all the increased regulatory pressure on financial institutions still weighs down their balance sheets. This is highlighted by the number of respondents who also cited compliance as a chief concern (28.7%), the number two challenge financial institutions say they face in the coming year.
Mitigating fraud and related cybersecurity issues also among the top biggest problems banking providers say they’ll wrestle with in 2016. Consumers have grown weary of data breaches. They resent it when their cards need to be replaced simply because there was a weak security link somewhere in the payments food chain; being forced to update all your online accounts and change all your autopays is about as disruptive and painful as switching banks, and even more irritating when you have to repeat the process every 6-18 months. The data in CSI’s study suggests banking providers are starting to appreciate both the reputational risks and hard costs associated with reissuing cards. This is definitely a major problem the industry needs to tackle.
Looking at the top three challenges cited by financial institutions, it seems they will be busy focusing on little more than internal issues — compliance, security and the bottom line — leaving little room for new customer-facing initiatives that could improve the experience. How can banks and credit unions innovate, develop new products and build out their digital capabilities when they have to expend so much of their time, energy and resources just treading water?