Current Trends for Financial Institutions

The past few months have generated a plethora of challenges and opportunities for financial institutions from predictions for another year of record-setting catastrophe claims to money movement in light of recent bank failures to increasing fraud rates. We’ve summarized the key trends for credit unions, banks, and insurance companies. Check it out: 

What Credit Unions Should Watch

Credit unions continue to see market share gains with consumers. Partly due to generally lower rates, credit unions beat out both banks and auto manufacturer lenders to claim the largest market share (30.7%) of all auto loans in the third quarter of 2022, according to Experian. 

Consumers are also re-evaluating their financial provider relationships and credit unions are seeing increased primary usage while primary usage for banks remains stagnant. 

Despite these opportunities, credit unions must also confront the challenges of dramatically rising fraud rates. According to Pindrop’s recent study, credit unions experienced more than a 70% increase in fraud rates in 2022.

What Banks Should Watch

It has never been more imperative for financial service providers to address dwindling consumer trust in the industry. According to the 2023 Edelman Trust Barometer, social media was the only industry sector consumers trusted less than financial services. 

The necessity to build consumer trust is only amplified by Apple pushing further into financial services, a notable threat when consumers rate the technology sector significantly higher in trustworthiness. 

As financial service providers weigh how to proceed, they’re also preparing for changes in the regulatory and payments landscape, with FedNow’s release this summer on the horizon. Cornerstone Advisors reports 3 out of 10 financial institutions are planning to launch real-time payments this year, in addition to the 18% of banks who have already done so.

What Insurance Companies Should Watch

Insurers face a unique combination of trends. According to Gallagher’s new report, Q1 reached a 12-year high in global economic losses due to natural disasters at an estimated $77 billion.

Claim costs for U.S. auto and homeowners insurance continue to climb, with the average rate for a full coverage auto insurance policy expected to increase 14% this year. 

Insurers are also presented with new market opportunities for acquisition and partnership caused by notable drops in InsureTech valuations.