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The Banking Transformations That Defined 2023

The general world of finance, but in particular minority banking, transformed radically in 2023. The financial industry is witnessing a paradigm shift, with a greater emphasis on inclusivity, diversity, and innovative solutions. In this blog, the National Bankers Association explores five key trends shaping the financial industry, including minority-owned and operated banks (MDIs), and how these changes foster financial inclusion and drive economic empowerment.

1. Financial Inclusion

The national conversation around diversity and equity continues, and financial inclusion is a crucial component. Consumers, especially younger generations, are placing a premium on socially responsible business practices. They want to do business and bank with mission-aligned organizations, like minority-owned and -operated banks. Financial institutions are responding by incorporating sustainability into their operations, supporting ethical investments, and aligning with community values. And while the industry is progressing, we are not at a point where every person has safe and easy access to financial services. As Nicole Elam, president and CEO of the National Bankers Association, states, "About 1 in 8 adults, or approximately 28 million Americans, are credit invisible—and another 21 million have unscorable credit. It's hard to build wealth without access to financial services. It's how we save for the future, buy a house, or build a business." 

However, inclusion is finally on the radar of the banking sector. John Hope Bryant, founder, chairman, and CEO of Operation Hope, said, "It's considered a serious issue now." In the past, it was considered more of a philanthropic endeavor. "Now Corporate America believes it's a permanent part of the ecosystem." Legacy banks are committing to make significant investments in underserved communities. These include Wells Fargo's 10-year Banking Inclusion InitiativeCiti's ESG program, which champions pay equity, addresses the racial wealth gap, increases economic mobility, and confronts the climate crisis, and JPMorgan Chase, which has committed 30 billion to racial equity. As Nicole Elam says, "Conversations have evolved from what you call it, to what it includes, to why it matters." And that leads to economic advancement for all people.

2. Financial Literacy

One of the foundations of economic empowerment and inclusion is financial literacy. Unfortunately, financial literacy is unevenly distributed among Americans. According to a study by the TIAA Institute and the Global Financial Literacy Excellence Center, Black Americans scored lower than White Americans on a financial literacy test, with an average score of 38% versus 55%. Hispanics scored lower than Whites as well. But this is no longer only a racial issue as the gap between rich and poor widens within the United States. That's why the National Bankers Association partnered with Our Money Matters (OMM) to offer their member banks and customers free financial wellness tools. Equipping individuals with the knowledge to make informed decisions lays the foundation for generational wealth building. With a comprehensive suite of tools and services, OMM teaches the importance of budgeting, improving credit scores, qualifying for a mortgage, and investing in the future. These skills not only create more resilient individuals but more resilient communities as well. According to research from the American Economic Association, formal financial education increases financial literacy scores by at least 3-6 percentage points. 

3. Climate Finance

Climate change is one of the most significant challenges faced by humanity. Coordination will be required between nations, corporations, and individuals to address it. The financial services industry will play a pivotal role because of the large-scale investments needed to transition to a low-carbon economy and enable societies to adapt and build resilience. According to the Harvard Business School, climate finance will mainly fall into two primary funding categories: adaption and mitigation. Adaption includes projects to reduce vulnerability and exposure to climate change and its effects. In contrast, mitigation projects will strive to reduce greenhouse gas emissions and remove them from the atmosphere.

All banking institutions will be a vital part of the solution. However, MDIs will be required to take a more direct role. The underserved communities where they are primarily located will endure the effects of global warming more rapidly, leading to a growing need for sustainable finance for these communities. To shed light on the current state of minority banks and the urgency of addressing climate change, the National Bankers Association and the National Bankers Association Foundation researched climate-related challenges and their impact on the banking industry and its underserved communities. Their research found that "zip codes with an MDI branch have higher climate risk exposure, especially for heat and wind risk, but also for flood and fire risk" (Source: NBA). That's why driving dollars into MDIs is a crucial first step in equipping often overlooked areas to come out ahead on the other side of the climate crisis. The MDI Sustainable Finance Program is dedicated to deploying capital, offering flexible and innovative lending products, and impacting investing opportunities to channel socially responsible investments. 

4. Digital Transformation and Accessibility

Digital transformation is no longer a choice for financial institutions but a necessity to thrive in today's technology-driven world. One of the biggest disruptors is Artificial Intelligence (AI). AI enables financial organizations to improve the quality of their offerings and customer experiences. In the short term, AI can also handle heavy workflows, reduce costs, and automate repetitive tasks, leaving banks time to focus on building their long-term digitalization strategy. However, the accelerated pace of this digital transformation makes it difficult for minority-owned and -operated banks to keep up. Yet, digitization is critical for MDIs to survive and remain competitive. That's why the National Bankers Association Foundation has collaborated with the Alliance for Innovative Regulation (AIR) and Citi Foundation's Community Finance Innovation Fund to create the MDI ConnectTech digitization program. By supporting investments in technology and talent, MDIs can multiply their lending capacity and increase customer access and affordability to financial products and services such as mobile banking apps, online platforms, and digital wallets. These tools are becoming essential for building long-term relationships, especially with Millennial and Gen-Z customers, and this shift towards digital banking also makes financial services available to a broader audience.

5. The Rise of Fintech and Corporate Partnerships

Fintech, or financial technology, has been instrumental in reshaping the financial services industry, disrupting traditional business models. Fintech companies may not need to invest money in a physical infrastructure like a branch network, so they may be able to offer cheaper services to consumers. They also collect and store more customer data, enabling them to provide more personalized products or services. So, while Fintech could be viewed as a competitor to traditional banking, they are more often a partner. These partnerships enable legacy institutions to engage with and learn from new technology in low-risk, low-cost ways. Recent research from financial software provider Finastra suggests that banks will turn to Fintechs to solve their digitization problem. Its poll of almost 750 banking leaders from across the globe found that 56% of respondents want to use a network of integrated Fintech solutions, with only 6% preferring to build functionality in-house. 75% of banks plan to engage with an average of three Fintechs over the next 12 to 18 months which will allow them to be nimbler in rolling out the technologies that consumers are demanding. 

And Fintech partnerships benefit both parties. The decrease in venture capital spending has hit the sector hard. A recent report by Innovate Finance shows that investment in Fintech globally fell by 30% in 2022 compared to the previous year. Partnerships will be imperative for smaller players to survive, and Fintechs also benefit from their banking partners' vast regulatory knowledge and large customer base. In the end, partnerships become a win-win for the entire industry and, most importantly, for customers.

Multiple corporations are partnering with minority banks through more significant lending and investment in underserved communities, capacity-building expertise, and enabling access to new products, services, and innovation. These expenditures are not only the right thing to do but also good for businesses as they show their investors, employees, and customers that they support minority banks and social justice.


2023 has been both an exciting and challenging year for the financial services industry. However, it’s evident that the industry is moving towards a more inclusive and innovative future. The trends mentioned above reflect a commitment to breaking down barriers, fostering economic empowerment, and creating a financial environment that genuinely serves the needs of all individuals and communities. Through digitalization, collaboration, inclusion, education, and customization, MDIs and larger financial institutions are poised to play a pivotal role in building a more equitable and prosperous society. 

To learn more about emerging trends, visit the highlights from our recent 2023 National Bankers Association conference.

To read more of our blogs, click here.


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