Where Commercial Banking and Payments Is Headed in 2023


Financial institutions (FIs) are no longer dealing with the immediate adaptations that COVID-19 required. Instead, the financial services industry is back to playing catch up to rapidly evolving technology and an increasingly competitive environment that has produced new opportunities and unique challenges.

Corporate end users continue to seek automated, intuitive payments and cash management products and services. Both FIs and vendors are meeting this demand, and many corporate clients are willing to work with both.

As a result, the ecosystem of competition—as well as partnership—between FIs and fintech vendors continues to define the financial services landscape. FIs have gone from making quick adjustments to meet customers’ needs during a pandemic to adapting to fast-paced technological innovation in order to keep up with industry change.

However, FIs are more aware than ever of the resources and time necessary to deliver optimal products and services. Since avoiding technological innovation is not an option, FIs are carefully navigating a situation in which they must simultaneously balance the short-term needs of their clients with the long-term investments in innovations on the horizon.

With FIs balancing short-term solutions and long-term strategic initiatives to keep up with ever-evolving technological innovation, Aite-Novarica Group recognizes several key trends for the commercial banking and payments industry in 2023.

Commercial Banking Top Trends 2023

A few of these are:

  • Payments infrastructure is enabling real-time everything. With immediate benefits such as paying just in time, improving operations, enhanced liquidity management, access to enriched data, and improving working capital, businesses are demanding real-time everything. Market-leading FIs across the globe have made inroads, but many FIs are encountering numerous pain points in enabling real-time payments. FIs should prepare for real-time now to avoid disintermediation from vendors and to prepare for ISO 20022 implementation.  
  • Life-cycle banking is going beyond Banking-as-a-Service (BaaS) products. BaaS products are offered “as-a-Service” and require a banking license. When combined by effective corporate users, they can function as a type of embedded banking. Life-cycle banking transcends embedded functionality since it accounts for the life cycle of users’ day-in-the-life activities throughout the financial supply chain of a company. This transition will increase value propositions beyond single “as-a-Service” and embedded products.
  • Embedded lending is likely to transform the small business (SMB) lending world. Using APIs to integrate over the firewall of their borrowers and directly into the accounting system for underwriting, embedded lending, for early adopters, has been shown to improve the borrower experience, streamline lender processes, and increase fraud protection. A divergence seems to be growing in the lending world between those who are seeking embedded capabilities and those who are not.
  • M&A activity continues to rise due to a challenging economic and competitive landscape. In many cases, mergers and acquisitions (M&A) are allowing combined resources to invest in new products, digital capabilities, and automated processes. While ultimately resulting in fewer FIs, M&A activity will continue, resulting in fewer, but more robust, product and service offerings from FIs.

Other areas like sustainability in commercial banking products and services, improved onboarding experiences, and growing demand for accounts payable solutions will also impact the financial services industry in 2023.

To learn more about the key trends Aite-Novarica Group is watching in the commercial banking and payments market this year, read the full report Top 10 Trends in Commercial Banking & Payments, 2023: Moving Toward a Period of Growth and Connection or reach out to Director, Commercial Banking & Payments Erika Baumann at [email protected]. You can also watch the recording of our January 31st webinar where we explored each of these top trends in detail. Click here to access the recording.