Jack Henry Report Warns FIs About Being a Fast Follower

By W.B. King

According to the Jack Henry’s 2025 Strategy Benchmark report, Regulatory Upheaval Creates Strategic Opportunity in the Era of Data, many financial institutions (76%) plan to increase respective technology spend this year and next. “Of those planning to increase, the biggest segment (33% in total) plans to increase investments between 6% and 10%,” the report noted. “Credit unions are more bullish on tech budgets, with 47% planning to increase tech investments between 6% and 10%, compared to 16% of banks. Most banks (43%) plan to increase their investments between 1% and 5%.”

Between January and February 2025, the report surveyed 149 bank and credit union CEOs, ranging in assets from under $500 million to more than $10 billion. The Monett, Mo.-based company bills itself as a well-rounded financial technology company that strengthens connections between people and their financial institutions (FIs).

CEOs said the top three technology investments will be digital banking, fraud prevention, and automation. “Investments in digital banking are likely to deliver dual benefits – enhancing the accountholder experience and fraud prevention. Modern systems that leverage identity data and enriched contextual information can better authenticate accountholders, help prevent attacks, and safeguard accountholders,” the report continued. “This year, banks report growing interest in cybersecurity (37%) and artificial intelligence (AI) (24%), while credit unions are placing greater emphasis on payments (32%) – an increase compared to last year.”

Randy Withrow, chief solutions officer and EVP of bank operations at the Nashville, Tenn.-based Pinnacle Bank noted: “Data is the key to success. We must be able to aggregate and analyze all data across all platforms to understand where our current focus is versus where it needs to be.”

Core Considerations

When it comes to transforming core offerings, respondents looked to transformative next-gen platforms, which is no longer a trend or buzz word. “As more FIs implement next-gen solutions, the benefits become increasingly evident, as their cloud-native infrastructures create a scalable, fast, and cost-efficient solution, while enabling real-time data streaming and orchestration,” the report noted. “Traditional core conversions often require complex rip-and-replace processes, creating a major hurdle – resulting in only 21% of bank executives expecting to switch to a new core provider when their current contract ends.”

The report also found that banks and credit unions are embracing the public cloud, with 30% of credit unions and 43% of banks planning to include a public-cloud-native core in their strategic plans over the next two years.

“As the adoption of cloud technologies accelerates, banks and credit unions are prioritizing enhanced scalability, cost efficiency, flexibility, greater agility, and faster speed to market. The composable architectures of next-gen cores are designed with a separate module for each function – allowing for incremental deployment,” the report continued. “This modularity reduces both the risk and cost of conversion, making the shift more manageable for financial institutions.”

Embedded Tech

With nearly all respondents planning to embed new technology into their digital banking experiences, the majority will prioritize digital account opening, followed by payments and digital marketing.

“Digital account opening is the nexus of efficiency, growth, and user experiences. As digital banking shifts toward enhancing the quality of features and refining the overall experience through targeted partnerships, deliberate personalization, and engagement, it’s clear digital account opening will play a big role in 2025 and 2026 tech plans. This approach allows banks and credit unions to target niches and segments that matter, while nurturing consumer-centric and sticky relationships,” the report stated. “Most FIs (94%) plan to embed fintech into their digital banking solutions, though significant differences exist between banks and credit unions regarding the types of fintech they plan to embed.”

Get Ahead of the Curve

While Jack Henry’s report also focused on topics such as lending, fraud and payments, Lee Wetherington, senior director, corporate strategy, cautioned CEOs not to be “fast followers” when adopting new tech (58% of respondents claimed this status.)

“In today’s complex and interdependent innovation ecosystem, coordination and integration of a growing number of partners and providers can slow time-to-market,” noted Wetherington, one of six report authors.

“If you want to emulate a cool new AI application or capability, you must first get the necessary data, which means establishing the integrations, open-banking plumbing, and APIs necessary to access that data,” he said.

“If you have the data and it’s trapped inside an older infrastructure, it can limit your ability to train and fine-tune AI models quickly and efficiently,” he continued. “In other words, fast following may not be an option today if you don’t have enough of the right data available in real-time or the modern infrastructure and integrations in place that make that possible – leaving you behind the curve instead.”

To learn more from Lee Wetherington and Jack Henry, checkout the May 22, 2025 Finopotamus TechSolutions4CUS podcast.