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Industry Outlook: Banking & Finance By Greg Bordonaro gbordonaro@hartfordbusiness.com S upply chain disruption, low interest rates, labor shortages and the path of the COVID-19 virus will all impact the business lending environment in 2022, bankers say, but there are many other issues top of mind for local and national banks operating in Connecticut. Whether it's the rush to invest in new technology to sate consumers' virtual demands, or competition for top talent and continued M&A activity in the marketplace, banks have a lot to prepare for in the year ahead. HBJ recently asked three top Connecticut bankers for their perspective on the major issues that will impact the industry in 2022. They included: David Glidden, president and CEO of Middletown- based Liberty Bank; Steve Webb, TD Bank's regional president of southern New England; and Joseph Gianni, the Greater Hartford president of Bank of America. Here are the top banking issues to watch in 2022: Innovation and digital technology As traditional banks face increased competition from financial technology companies, the pressure to invest in digital services is only increasing. In some cases, that means investing in-house in new digital technologies, or partnering with a fintech company that has already developed an in-demand service. Liberty Bank, which has $7.3 billion in assets, has chosen the partnership path, teaming up with several fintechs to launch new digital services like account-to-account transfers, new account funding, loan services, financial wellness and credit monitoring. It's also planning to launch its first digital bank in 2022. "Innovation is critical to the future of banking and will continue to grow more vital in 2022 as banks look to grow their balance sheets, enhance customer experiences and adapt to changing banking habits," Glidden said. "The industry is experiencing tremendous competition from not only the big money center banks, but now fintechs are gaining scale. … Banks are not going to win in a 'sea of sameness' and growth is unrealistic by maintaining the status quo. It has to come from instilling a culture of innovation to deliver on shifting customer expectations." For many banks, the pandemic triggered the rapid adoption of digital services for business and retail consumers, Webb said. TD Bank, for example, designed new processes and service offerings such as remote closings and an accounting service for small businesses that integrates into their online banking. "With the pandemic now present for almost two years, it has shown not only how quickly banks can move in the space of technology innovation, but also highlighted the areas that needed the most improvement after being put in the pressure cooker of such a drastic world event," Webb said. Bank of America over the last few years has seen high rates of digital adoption among clients across all sectors, spanning from individuals handling their basic banking needs to managing their investments, and businesses small and large, Gianni said. Market disruption Industry experts predict increased M&A and consolidation in 2022 as banks cope with interest rate pressure and a struggle to compete in the ever-advancing digital transformation, Glidden said. In turn, this is leading to an elevated market disruption that banks can leverage into 2022. "There will be more bank consolidation this year," Glidden said. "Community banks must continue to capitalize off this trend to acquire new customers looking to switch banks, recruit industry talent looking M&A activity, fintech adoption, 'talent wars' will impact banks in 2022 David Glidden is the president and CEO of Middletown-based Liberty Bank. HBJ FILE PHOTO 22 HARTFORDBUSINESS.COM | JANUARY 3, 2022