Q2 Announces 2024 State of Commercial Banking Report

Report reveals commercial banking trends and the role technology investments play in addressing industry talent challenges, strengthening business banking relationships and improving back-office efficiency
BusinessWireFebruary 1, 20245 min

Q2 Holdings, Inc.Ā (NYSE:QTWO), a leading provider of digital transformation solutions for banking and lending, will release its State of Commercial Banking January 2024 Market Analysis report following the State of Commercial Banking webinar, which will take place on Thursday, February 8, at 12:30 p.m. CST. The report is an annual review of major trends in the commercial banking industry, based on Q2ā€™s proprietary databases, from the previous 12 months. In addition, it looks at the challenges and opportunities ahead in the coming year. The reportā€™s findings and exclusive insight into commercial banking market trends and predictions will be shared during the webinar.

ā€œThe commercial banking market is at a pivotal point in its evolution,ā€ said Gita Thollesson, manager, Strategic Advisory Services, Q2. ā€œLast year, bankers focused on navigating uncharted waters as they faced macro-economic challenges. In 2024, with regulatory changes on the horizon and technology advancing at lightning speed, it is more important than ever to prioritize strategic foresight and adaptability to prepare for an uncertain future.ā€

This report is based on findings fromĀ Q2 PrecisionLenderā€™sĀ proprietary database of 2023 commercial lending deal flow, along with economic data from several public sources, including the Federal Deposit Insurance Corporation (FDIC) and Federal Reserve, and industry research. Q2 PrecisionLender data reflects commercial relationships from more than 160 geographically diverse banks and credit unions in North America, ranging in size from small community banks to top 10 U.S. institutions.

Key Takeaways from the Report:

  • Liquidity management takes center stage: Deposit growth remains an industrywide challenge. Scarce liquidity is leading to supply-side contractions, while elevated interest rates are slowing loan demand;
  • Regulatory changes are expected to impact capital: Even though the final form of Basel III Finalized hasnā€™t been determined, itā€™s already leading bank treasurers and capital subject matter experts to rethink capital strategy and pricing;
  • Higher rates are driving repricing risk on maturing deals:Ā Interest rate hikes have driven a shift toward floating rate structures and significantly increased the repricing risk on maturing fixed-rate deals;
  • Thereā€™s a renewed focus on automation and systems integration:Ā A need for greater back-office efficiency in mid-size to large businesses is driving demand for more automation and integration between their banking and back-office systems;
  • Technology is helping bridge the talent gap:Ā The talent shortage is hindering financial institutionsā€™ ability to compete and win, and they are looking to technology to help bridge the gap for less experienced employees; and
  • Opportunities exist to drive deposit growth from small businesses:Ā Small businesses can be a potential source of deposit growth if financial institutions target and nurture those relationships effectively. Technology advancements are making it more cost-efficient to do so.



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