top of page

Research Brief

Navigating the Digital Frontier in Banking: 
Challenges and Opportunities for Mission-Driven Financial Institutions

AUTHORS:

Anthony Barr, Research and Impact Director
National Bankers Foundation

Stephanie Thomas, Deputy Executive Director
National Bankers Association Foundation


Nicole Elam, Esq., Executive Director
National Bankers Association Foundation
President & CEO
National Bankers Association
NBAF - Research Brief - Navigating the Digital Frontier in Banking Challenges and Opportun
Description
Digitalization in the banking sector involves both consumer-facing innovations, such as mobile banking apps, as well as internal innovations around task automation, analytics and forecasting, and impact measurement and reporting. While mission-driven lenders excel at in-person services, digitalization is a key growth area to ensure these lenders can withstand market competition, streamline their operations, and deepen their social impact.
 
Key Insights:
 
  • The pandemic accelerated the use of mobile and online banking, while visits to branches and ATMs have decreased substantially, particularly for Millennial and GenZ customers.
  • Digitalization improves the customer experience and allows financial institutions to reduce administrative costs, streamline bank operations, and achieve better economies of scale.
  • But digitalization is also heightening competition in the financial sector, and mission-driven lenders face an existential risk from large banks, fintechs, major retailers, and social media platforms, who are often further along on the digitalization journey. 
  • Many mission-driven banks have struggled to keep up with the evolving spectrum of digitalization due to cost, capacity, and struggles around compliance and security.
 

Implications:
 
  • There is a fleeting window for mission-driven lenders to embrace digitalization before they face headwinds that could ultimately deplete their market share. 
  • Mission-driven lenders that embrace digitalization can find new opportunities to deepen their social impact while ensuring long-term financial stability amidst changing macro environments.
  • To overcome barriers to digitalization, mission-driven lenders need direct support from the government, philanthropy, and the private sector – including capital investment, technical assistance, and clearer regulatory guidance.

Published April 26, 2023

Download Navigating the Digital Frontier in Banking: Challenges and Opportunities for Mission-Driven Financial Institutions. 

lines ko.png

If you want to learn more about MDI ConnectTech or explore partnership opportunities with this transformative program, please email MDIConnectTech@nationalbankers.org.

If you want to learn more about the mission-driven research conducted by the National Bankers Association Foundation, please email
abarr@nationalbankers.org.

bottom of page