Stabilizing deposit growth: Consumer deposit outflows have slowed, and small business deposits are showing signs of growth. Still, financial institutions must prepare for a wave of short-term CDs that will soon mature while consumers remain yield-hungry, which will continue to challenge deposit growth. To attract and retain customers, institutions must optimize mobile-only account opening to capture Gen Z, prioritize personalization, deepen relationships, remain flexible with pricing and terms, and offer new products and services—especially faster and easier payment acceptance for small businesses. Community and regional financial institutions may also use open banking as an opportunity to gather more data on customers and prospects and use that intelligence to track and reverse deposit attrition as well as provide superior personal service at scale in digital contexts.
Lending that competes and differentiates: Lenders face pressure to adopt artificial intelligence (AI) to improve efficiency, speed, and scale in areas like financial analysis, underwriting, and risk identification. Collaborating with vendors can help banks and credit unions overcome their concerns around AI and compete with fintech lenders and big banks. By combining relationship-based strengths with AI, community financial institutions can efficiently and quickly fund loans, achieving scale without losing their personal touch. This is especially important because banks and credit unions are known for adapting lending models to provide quick, flexible financing during cash crunches or emergencies, supporting their communities in times of need.
Collaboration in the fight against fraud: Scams are increasingly exploiting financial institutions' blind spots, with fraudsters targeting accountholders through social media, text messages, and fake investment apps. Financial institutions often absorb the losses. Deepfakes and AI-generated synthetic identities further compound these vulnerabilities. Strengthening cross-sector collaboration among law enforcement, telecom providers, social media, and regulatory bodies is critical for enhancing visibility and mitigating scams. These efforts can also drive the adoption of stronger identification verification systems.
Payment solutions aid in financial health: Small businesses will rely on real-time payments to expedite receivables, optimize just-in-time payables, and gain more accurate insights and forecasts on cash flow. Bank bill pay and pay-by-bank will also give financial institutions the visibility to help accountholders manage their cash flow and avoid debt cycles. As demand drives these advanced solutions, financial institutions will continue to leverage data to improve user experiences and financial health.
Open banking and data management mature: Strategic financial institutions will go beyond regulatory requirements by creating data management strategies that give both consumers and businesses more control of their financial information. Providing a central hub for accountholders to manage data and privacy settings will make a financial institution the focal point of the account holders’ financial lives. This supports the goal of the open-banking movement: to enable flexible data-sharing options that provide more transparency and better financial decisions informed by a comprehensive view of the accountholder’s finances. Institutions that invest early can gain dividends in data and deepen relationships.
“Banking advancements in 2025 will be fueled by industry and fintech collaboration, enabling community and regional institutions to combine new technology with their signature personal service to differentiate and grow,” said Jenifer Geis, Senior Analyst, Corporate Strategy, at Jack Henry. “We’re seeing more banks and credit unions apply data, AI and other emerging technologies in significant ways. It will be an exciting era for banking, one where we realize new levels of personalized service and money management that changes lives and strengthens communities.”
About Jack Henry & Associates, Inc.®
Jack Henry™ (Nasdaq: JKHY) is a well-rounded financial technology company that strengthens connections between financial institutions and the people and businesses they serve. We are an S&P 500 company that prioritizes openness, collaboration, and user centricity – offering banks and credit unions a vibrant ecosystem of internally developed modern capabilities as well as the ability to integrate with leading fintechs. For more than 48 years, Jack Henry has provided technology solutions to enable clients to innovate faster, strategically differentiate, and successfully compete while serving the evolving needs of their accountholders. We empower approximately 7,500 clients with people-inspired innovation, personal service, and insight-driven solutions that help reduce the barriers to financial health. Additional information is available at www.jackhenry.com.