The long-awaited results of the 2024 Jack Henry™ Strategy Benchmark are now available.
Jack Henry’s sixth annual survey reveals key insights and valuable lessons from bank and credit union CEOs to help them capitalize on market shifts and new opportunities, refine their strategic plans, and win against the competition in 2024 and 2025.
Below are key takeaways from the 2024 survey.
Increasing deposits It is the top strategic priority for all financial institutions in 2024 and 2025. In fact, 72% of bank CEOs say deposit growth is most important. With expenses putting downward pressure on bottom lines, banks are feeling more urgency about deposit growth heading into 2024. Improve business efficiency – It is the second most important priority.
Here are the top concerns for banks over the next two years:
- Net interest margin (NIM) compression
- Sediment loss/movement
- Talent Acquisition and Retention
80% of all financial institutions plan to increase their technology spending over the next two years, with fraud detection/mitigation, digital banking, and data analytics expected to be the top three technology investments for 2024 and 2025.
Additionally, 92% of financial institutions plan to incorporate fintechs into their digital banking experience. Banks are specifically looking to fintechs for small and medium-sized business (SMB) services and assistance with financial management, and plan to incorporate payments fintechs.
Plans to launch a banking-as-a-service (BaaS) business line (bundling banking activities into a third-party, non-banking brand) are being significantly inhibited by increased regulatory scrutiny and associated compliance costs introduced in 2023. Indeed, only 30% of financial institutions cite BaaS plans for 2024 and 2025.
90% of financial institutions plan to serve niche markets in the next two years.
- Banks (86%) will target corporates.
- 78% of respondents plan to expand small business services (including payments, business credit/lending, and merchant services).
The majority of financial institutions (96%) plan to add payment services within the next two years. The top priority is FedNow® services, followed by digital card issuance, contactless cards and same-day ACH. The percentage of bank CEOs who plan to add real-time payments from The Clearing House has doubled this year.
97% of respondents plan to enhance their lending capabilities, with banks focusing on automated workflows and custom/automated financial spreads.
While fraud is the leading technology investment planned for 2024 and 2025, all financial institutions agree that check fraud is the biggest fraud threat, followed by romance/investment scams and account takeover. Respondents also named employee social engineering and data breaches as their biggest cyber threats for this year and next.
In 2024 and 2025, financial institutions will be under pressure to improve profitability and address non-interest income concerns while fighting to survive in an increasingly competitive and turbulent market environment, so their strategic priorities and technology investment plans will be similar to those of the overall market.
As 2024 ends and we move into 2025, the need to automate expensive, highly manual processes remains a top priority and budgetary imperative for financial institutions. To achieve this objective, enterprise workflows, robotic process automation (RPA), machine learning (ML) and AI are required, not to mention strategic agility in the open banking era of data-driven financial services.
Banks that proactively take advantage of market shifts will be well positioned to capture upside potential and mitigate downside risks, regardless of how the economy unfolds in 2024 and 2025.
Download the 2024 Strategy Benchmark It will help you with your strategy and enable you to compete more effectively.
