Q2 Holdings, Inc., a provider of digital transformation solutions for banking and lending, released its 2022 State of Commercial Banking Market Analysis Report. The report, based on insights mined from Q2’s proprietary databases, is an annual review of the major trends in the commercial banking industry from the previous 12 months, as well as a look at the challenges and opportunities ahead in the coming year.

 “Following the market uncertainty at the end of 2020 and continued weakness in loan demand in 2021, we are seeing a conservative shift toward growth in 2022,” said Gita Thollesson, Senior Strategic Business Advisor for Q2. “This year, the commercial banking market remains competitive with a continuously evolving landscape.”

Findings for this report are based on Q2’s PrecisionLender proprietary database of over $3.7 trillion in 2021 commercial lending deal flow, along with economic data from several public sources, including the Federal Deposit Insurance Corporation (FDIC) and Federal Reserve, in addition to industry research. Q2’s PrecisionLender data reflects actual commercial relationships from more than 150 geographically diverse banks and credit unions in the United States, ranging in size from small community banks to top ten U.S. institutions. The report also reveals market trends in payment fraud activity based on Q2’s Centrix Exact/TMS data from nearly 200 financial institutions across the U.S.

The findings from the report reveals five key takeaways:

• The banking market is poised for a rebound: Predictions show the supply and demand imbalance is expected to abate and inflationary pressures are likely to fuel additional loan demand.
• The outlook for credit is favorable: Data finds banks are optimistic on credit quality going into the new year, however, some pockets of the market such as the hospitality sector remain under stress.
• Pressure on net interest margin (NIM) Continues: Margins are trending lower, intensifying competition.
• Transformation in banking is accelerating: Increased demand for digital solutions and the emergence of AI tools have impacted the value of branch banking while concurrently raising the specter of fraud.
• Primacy has taken hold: An increased focus on relationship banking and becoming a customers’ primary bank continues to trend in priority.

“The findings of this year’s report present an opportunity for financial institutions to reinforce and grow their capabilities for new and existing customers,” said Thollesson. “The data from the 2022 State of Commercial Banking Market Analysis Report shows increased optimism on credit quality, a growing priority to become and remain a customers’ primary bank and continued demand for digital solutions. We look forward to what lies ahead for the industry and financial institutions as they continue to deliver value and expanded services to customers.”

To learn more, click here to download the 2022 State of Commercial Banking Market Analysis Report and watch the recent webinar featuring Gita Thollesson.