Commercial Banks Restore Liquidity to Near Pre-Crisis Levels

While liquidity levels have improved, they come at a higher cost, putting pressure on net interest margins. Despite this, financial institutions have managed to rebuild their deposit bases to near pre-crisis levels, laying a solid foundation for future stability. However, the increased expense of interest-bearing deposits has squeezed profitability, pushing banks to focus on cross-selling and adopt cutting-edge technologies like artificial intelligence (AI) and enterprise resource planning (ERP) integration to drive growth.

From combating payment fraud to strengthening their position in a competitive digital marketplace, financial institutions must strategically leverage digital tools to enhance profitability and meet customer expectations for efficiency and innovation.

While the findings point to some positive developments, significant hurdles remain. Rising fraud levels, for instance, continue to plague the industry. Advanced technologies like AI, and a centralised approach can help banks and credit unions become stronger allies for business customers in the fight against fraud.

Another opportunity lies in the underserved small and medium-sized business (SMB) market. To tap into this potential, financial institutions need digital platforms that integrate seamlessly with fintech solutions, deliver exceptional customer experiences, and use data to personalise outreach. Efficiency and user experience are also becoming increasingly critical for midsize and large companies, as they look to their banks for tools to manage their operations more effectively.

As the industry moves into 2025, the message is clear: embracing innovation and digital transformation will be key to staying competitive and meeting the evolving needs of customers.