Banking Technology Strategies for Recession Planning | Core10

Are you ready to ring in the new year with a recession? Probably not. According to Forbes, by definition, we’ve been living in a recession since the summer of 2022. While some experts argue whether we are currently in a recession, they seem to agree that the future looks grim. The Wall Street Journal reports that the United States will enter a recession within the next 12 months. 

As businesses around the world brace for the economic impact of a possible recession, community banks must also be prepared to weather any coming storm. 

Fortunately, investing in technology can help these smaller banks power through a recession and come out ahead of their competitors. In this article, we explore three ways in which community banks can invest in technology and stay afloat during tough times.

Don’t just survive – thrive through the recession.

When it comes to weathering a recession, banks need to do more than just survive – they need to thrive. And one of the best ways to do that is by utilizing banking technology investments.

Technology can help banks in a number of ways during a recession. For one, it can help them reduce costs and improve efficiency. It can also help them tap into new markets and reach new customers.

But not all technology investments are created equal. So, what strategies can a small- or mid-sized bank implement to help them thrive in 2023 and beyond? 

There are three areas to focus your technology budget in 2023 and help with recession planning:

1. Investments in your bank’s core integration.
2. Automate the mundane tasks through fintech integrations.
3. Investments in your bank’s data strategy.

Let’s take a deeper look at how you can implement each of these strategies.

Strategy #1: Invest in the Bank’s Core

Amid a recession, banks need to find ways to cut costs and improve efficiencies. One strategy to deploy is investing in the bank’s core technology infrastructure. 

Investing in your bank’s core allows you to:

1. Implement cutting-edge solutions. The solutions your core provider offers may solve bank challenges that easily integrate into your organization. 
2. Connect through API gateways. API gateways standardize and centralize delivery of services, reducing the complexity of your system, boosting the performance of requested data, and enhancing security. 

For example, Jack Henry plans to launch a new product called Jack Henry Financial Crimes Defender™ early this year. The platform integrates Feedzai, the world’s largest RiskOps platform to manage financial risk. This tool is positioned to create solutions that help banks and credit unions address business opportunities and challenges and build tools that meet customer expectations. Banks that invest in their core can take advantage of similar tools to continue to provide exceptional service to their customers and be at the forefront of the competition. 

While investing in new technology can be expensive, it is important for banks to consider the long-term benefits of doing so. Investing in the bank’s core technology infrastructure can help banks improve their competitive position, better serve their customers, and become more efficient in their operations.

Strategy #2: Automate the Mundane and Add Revenue Through Fintech Integrations 

The second strategy a bank can direct its technology budget toward is investing in integrations to automate business processes or add new features.

Focusing on your bank’s integrations means: 

1. Reducing manual workloads and enhancing process automation (i.e., our digital account and lending platform, Accrue). 
2. Taking ownership of your tech stack. Our iPaaS solution, Mesh, empowers banks to take ownership of their tech stack, allowing for rapid innovation and cost savings. 
3. Creating revenue through digital banking partnerships, such as utilizing BaaS solutions to attract a new set of customers and revenue streams.

Through a well-integrated system, your bank can implement automation across several levels of the organization, increasing efficiency by reducing manual workloads and labor needs. 

Utilizing integration tools, such as Mesh, enables banks to partner with Banking as a Service (BaaS) platforms to streamline process automation. These platforms can provide a plethora of benefits, including a whole new set of customers and revenue streams for banks. 

For example, BaaS platforms like Unit and Synctera are fintechs who drive deposits. They need bank partners and pay banks to use their platforms for services such as compliance and monitoring. In addition, through these partnerships, community banks can expand their offerings and even expand loans, deposits and non-interest income.

Tools like Mesh also allow banks to offer their own BaaS platform by wrapping their core and fintech partners into a cohesive solution. 

Strategy #3: Invest in the Bank’s Data Strategy

Finally, investing in a bank’s data strategy ensures you have the power to make changes quickly and effectively to address areas of financial concern. A popular method to quickly access data in storage is a data lake strategy. 

Data lake strategies:

• Allow banks to store raw data – from a variety of systems – in one place at a low cost, instead of using multiple systems to store the same data. Banks can then pull the data for analytics on an as-needed basis. 
• Are versatile and eliminate the need for data modeling at the time of ingestion. It can take multi-structured data or unstructured data from a variety of sources. 
• Meet compliance and regulatory hurdles with centralized data, avoiding unnecessary penalties. 
• Democratize the data, allowing anyone who has access to use that data and pull it for advanced reporting and analytics, not just individuals at the top of the organization. 

In a time of recession, data and analytics are imperative to make informed decisions and avoid further economic turmoil.

Preparing for a recession is a daunting task, no matter the industry or size of your organization. These three strategies can help set your bank up for success in 2023 and beyond. If your technology budget for 2023 has left you in a state of stress and worry, check out our blog post on how to recession-proof your budget.  

We can help you figure out the best investments that will help you not only weather the storm of a recession but thrive throughout it. Learn more about Core10’s products and services by meeting with our team.