The past few years have been a roller coaster for businesses. From weathering the pandemic to navigating inflation, businesses have been forced to adapt to the ever-changing economic environment or risk going under. With a potential recession on the horizon, business owners are staying agile to ensure they can handle new challenges that come their way. As a result, we’re seeing new trends come to light in business banking.

Increased investments in equipment

It’s no secret that labor shortages have plagued businesses since the beginning of the pandemic and it’s still an issue today. Rather than trying to fill positions with new employees, businesses are working to determine how they can create efficiencies not determined by labor because labor is unpredictable.

Businesses are beginning to see trends in candidates agreeing to interviews then never showing up – and it’s changed the way business owners budget and fund their business. Now, businesses are reallocating money that was once budgeted for full-time employees to increase their investment in equipment and technology. If there’s a piece of equipment or a technological investment that can get the job done, chances are business owners are going to make that purchase versus hiring a new employee.

Responding to rate increases

Rate increases from the Fed came fast and furious in 2022. While we once thought these increases would slow down business, instead, businesses are adapting to these new rates and continuing with business as usual. Rates have increased significantly but are still attractive compared to historical norms. For example, before 2008, rates were anywhere from 7%-8%. At just over 6% currently, it still makes sense for business to invest in items such as new equipment that can generate a 10% increase in business. From what we’ve seen, new acquisitions aren’t slowing down and business owners have solid pipelines of business, so we’ll likely continue to see businesses adapting and moving forward with higher rates.

Continued fraud education

Fraudsters are getting smarter every day and are always changing their approach in hopes of duping businesses into fraudulent transactions, with external perpetrators recently identified as a rising threat. In fact, PwC’s Global Economic Crime and Fraud Survey 2022‡ found that nearly 70% of organizations experiencing fraud reported that the most disruptive incident came via an external attack or collusion between external and internal sources.

While banks do everything in their power to reduce the risk of fraud, they can’t prevent clients from unknowingly participating in a scam. Wire fraud is one of the bigger risks that requires diligence on the front end. It’s critical that business owners verify that they are sending money to the correct person before moving forward with a wire transfer. For example, we’ve seen instances where the scammer has duplicated a vendor’s website and reached out to the business for payment, tricking them into thinking they’re paying a vendor when it was actually a scammer. It’s critical that business owners continue to learn about the latest fraud schemes and ensure their entire team knows what to look out for.

Recession or not, as the economy continues to change, it’s important for businesses to adapt along with it.

If you are interested in learning more about how UMB can help your business as a financial partner, connect with our business banking team or visit our website.

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