Market Overview

SRM Provides Guidance on Trends Shaping 2018


SRM (Strategic Resource Management), an independent advisory firm for
financial institutions, has released its semiannual industry trends and
forecasts, offering perspective for financial institutions' near-term
decision making. SRM tracks existing and emerging trends in the
industry, publishing a view to what the firm expects every six months.

Brad Downs, CEO of SRM, commented, "The past six months have been marked
by surprising acquisitions, intriguing alliances and continued curiosity
around new market entrants. We are seeing vendor contracts put up for
review much more frequently than in the past, and financial institutions
have hastened in their fintech evaluations. These factors can make for a
complicated decision cycle; a process that we want financial
institutions to enter into well informed and positioned for success."


  • P2P is nearing critical mass. Some institutions have yet to
    offer the service, but independent P2P providers have bridged that
    gap. We should continue to see broader, more efficient payment options
    presented for all use cases, from splitting lunches to paying school
    fundraisers or making high dollar sales.
  • Debit card portfolios continue to be under optimized. Banks and
    credit unions are sitting on top of a material amount of opportunity
    to unlock the value in these portfolios while improving customer
    loyalty through top of wallet promotional efforts. Look for more
    institutions to engage in penetration, activation and use (PAU)
    programs that are designed specifically for improving debit card
    portfolio value.

Digital Strategy

  • The replacement of aging online and mobile banking products has
    reached escape velocity. The largest technology replacement cycle in
    the U.S. banking system is underway as financial institutions identify
    ways to reduce the cost and complexities created by disparate digital
  • Building a truly comprehensive digital channel feeds into pressure
    to have a competitive data analytics strategy
    . An increasing
    number of regional, mid-sized and community institutions are
    interested in how data analytics can help them add value to customer
    relationships through individually tailored offers and advice. Most
    still struggle to understand how to apply the data they have, but more
    use cases will emerge soon.

Core Processing

  • Some larger banks and credit unions are envisioning digital as the
    "new core,"
    whereby the digital platform becomes the system that
    manages all customer interactions. The core processing system
    continues to serve as the keeper of account balances and related
    bookkeeping tasks in this scenario, but the digital platform mitigates
    the impact of innovation on the core.
  • Newer players entering the core space are utilizing
    micro-services and component-based design, modernizing an area within
    financial institutions that has typically suffered from the
    limitations associated with aged, legacy systems. The use of the cloud
    by some of these new players is bringing new, attractive economics
    related to the licensing and maintenance of their solutions.


  • An increasing number of banks and credit unions are outsourcing
    digital, IT, compliance and core competencies
    . Previously a
    preferred deployment option for smaller institutions, now regional and
    multi-billion dollar institutions are embracing outsourcing. The trend
    will continue as the demands for continuous innovation grow.
  • Artificial intelligence (AI) and machine learning will become
    , opening up access to these technologies for community
    banks and credit unions. The applications for both stretch across all
    areas of an institution's operations, delivering increased
    efficiencies and more personalized services.
  • Biometrics and voice recognition can make a difference for
    fraud to issuers. Voice recognition is boasting nearly 100% accuracy.
    Also look for voice-interfaces to become more commonplace in mobile
    banking as banks and credit unions look for ways to decrease friction
    for the end users while increasing security for the institution
    offering the service.


  • $2.4 trillion in deposits has moved into the largest U.S. banks,
    cutting off the cash flow from the rest of the market. M&A activity
    remains concentrated in regional, mid-tier and community institutions
    as they attempt to gain scale to stem the loss of consumers to
    national brands. Though consolidation in banking is likely to remain
    at or near the average of 4% per annum, the locus of current activity
    along with ongoing investments in technology could change the
    competitive dynamics in the marketplace.

Downs continued, "It's not a surprise that financial institutions are
concentrating their technology spend on data, AI, biometrics, and
seamless digital experiences. The decisions banks and credit unions make
today with regard to their technology partners are more critical than
ever. There will be winners and losers. We are seeing a number of our
clients position themselves to be in the former group."

About SRM
SRM (Strategic Resource Management) has been
trusted by more than 700 financial institutions to serve as a trusted
advisor in areas such as payments, digital banking, core processing and
operational efficiencies. The company has unlocked billions of dollars
in value and improved the competitive advantage of its clients with its
reputation for its industry-leading subject matter expertise,
proprietary benchmark database and proven negotiating skills. Visit
for more information and follow the company @SRMCorp.

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