Key Takeaways
- Rising interest rates will have banks competing for commercial deposits.
- My IBISWorld for Banking added several new products and enhancements in 2022, including State and Local information.
- Taking a consultative approach with commercial clients will be key to retaining deposits and loan growth should the US face a recession in 2023.
2022 was an exciting one for IBISWorld and its Commercial Banking clients.
Namely, it presented numerous challenges where a tight labor market and inflation led to higher business costs and rising interest rates from the Federal Reserve.
However, it also presented various opportunities. We saw many bankers continue to foster new client relationships forged through the PPP program and implement new digital technologies to better serve business owners.
Throughout 2022, IBISWorld’s Commercial Banking team made a concerted effort to adapt to the changing landscape and help banks and credit unions navigate some of these trends, even when they seemed to be changing week to week.
A few items that we’re especially proud of:
- New State and County Level Industry Data – In October, IBISWorld launched its new State collection, now providing bankers with industry-level information in all 50 US states, plus Provincial data for our many Canadian clients. More local information about industry revenue growth and labor trends can help Relationship Managers engage in more meaningful conversations with local business owners and provide more accurate benchmarking for Credit Analysts. After more than a year of development, we’ve been excited to bring this new product to market and already have 150+ institutions using it.
- Inflation Tracker Tool – With inflation eating into businesses’ bottom lines, IBISWorld’s Production staff have created a new tool that helps bankers identify the impact of inflation across all NAICS codes. For those managing a commercial portfolio, this meant being able to quickly pinpoint customers that may have a harder time paying off their debt in the current environment. Much like our COVID-19 Impact Updates in 2020 and 2021, we worked quickly to react to the questions banks were posing to us and made this tool available to them at no additional cost.
- Recent Developments – Speaking of which, in 2022, our COVID-19 Impact Updates transformed into a new Recent Developments section of our industry reports, where IBISWorld can keep bankers up to speed on newsworthy topics beyond the pandemic (i.e. how the conflict in Ukraine impacted certain industries, supply chain disruptions or regulatory concerns). Along with our Call Prep Questions, bankers can use these news items to open up conversations about how world events might impact clients’ cash flow, profits or overall strategy.
What's new for 2023?
Moving into 2023, we don’t plan on slowing down and are excited to begin announcing further product enhancements.
However, if January’s earnings reports are any indication, many banks and credit unions are bracing themselves for the US economy to take a downturn. Most are cautious to forecast much more than a “shallow” recession, but loan growth could be negatively impacted.
In uncertain times like that, retaining clients (and most certainly their deposits) will become just as important as winning the new ones, and credit standards could experience some tightening.
Whether you’re a Business Banker, Commercial Lender, Treasury Management professional, Credit Analyst or Portfolio Manager, up-to-date industry analysis should help make tough decisions easier.
Here are a few questions to keep in mind when trying to build that trust with customers, and in some cases, vet them:
- How have your customer’s profit margins fared in the past couple of years compared with other industry operators? If they’ve underperformed, are there areas of their cost structure where they’re overspending compared with other businesses?
- What is your customer’s outlook for their business, and how does that compare to IBISWorld’s industry forecast? Are there headwinds or tailwinds they haven’t yet accounted for?
- Are there any state or local-level trends they need to keep in mind? Is there an opportunity to educate them on their local economy?
These questions are just scratching the surface, but if you need help getting there, your IBISWorld Client Relationship Manager is available to help navigate our platform and illustrate how similar-sized institutions are leveraging it.
We hope you and your families had a happy and healthy New Year, and we look forward to helping tackle 2023!
