Continued adoption of open banking, enhanced cybersecurity and evolving regulatory concerns shape what financial institutions must consider when developing their strategies. However, these areas also represent a tremendous opportunity for those who adapt.
CSI’s Banking Priorities Survey – which asked a cross-section of community bankers nationwide about their strategies and priorities for 2025 – explored both, taking the industry’s pulse and plans for the year.2025’s Foremost Challenge: Cybersecurity/Data Privacy
Although we’ve made advances in cybersecurity monitoring technology, cyberattacks continue making headlines and concern institutions of all sizes. The average cost of a data breach rose from $5.9 million in 2023 to $6.08 million in 2024. A successful cyberattack can also expose an institution to reputational and legal consequences. For all these reasons, paired with regulatory scrutiny, 28% listed cybersecurity/data privacy as the most pressing issue, surpassing all other concerns.
To stay ahead of cyber threats, institutions need around-the-clock monitoring and response. A managed cybersecurity monitoring platform helps institutions identify anomalies and send alerts for investigation to ensure the threat doesn’t spread. Solutions like data loss prevention help institutions protect their data and control how it’s shared. Implementing cyber hygiene is another effective strategy to improve security and keep employees and consumers safe.
2025’s Second Most Significant Challenge: Interest Rates
Interest rates surged in 2022 and 2023 due to the Federal Reserve’s efforts to curb inflation, creating a challenging environment for community banks. Bankers’ concern for interest rates has lowered since 2023, potentially due to stabilizing rates and anticipated future rate changes from the Fed. Nevertheless, it ranked second highest on their list of concerns.
This economic uncertainty is prompting a prioritization of digital account opening and related technologies, emphasizing gaining new accounts and low-interest deposits. Institutions should also evaluate opportunities within their existing market and portfolio.
Diversifying portfolios through resources like lending marketplaces is another avenue institutions are exploring to weather the effect of high interest rates.
Bankers’ Top Technology Investments
Financial institutions are doubling down on digital-first technology investments to meet the evolving needs of a convenience-driven, tech-savvy clientele.
2025’s Leading Investment: Efficiency Drivers like Automation or AI
At the forefront of technology investments lies efficiency drivers like automation or AI, with 43% of bankers acknowledging its importance. Most banks are seeking efficiencies in back-office processes, with some beginning to utilize AI and automation to remove manual steps and add new functionality.
The rise of generative AI tools offers the potential for heightened efficiency in the banking sector. Automation enables banks to streamline processes, improve customer interactions and strengthen fraud detection.
2025’s Second Highest Ranking Investment: Data Analytics and Reporting
Garnering 42% of the vote, data analytics and reporting are transforming banking and customer experience. Data analytics and reporting provide banks with insight to understand customer behavior and identify areas to better serve them, including customizing offerings and promoting them via the digital experience.
Using data analytics and reporting to personalize the digital experience is the core of digital engagement. To improve digital engagement, banks should strive to provide unique solutions to best serve customers and increase the adoption of those services. The more personalization banks build into their products and experiences, the more they will drive engagement, adoption and loyalty.
Bankers’ Top Opportunities For 2025
Bankers are strategically engaging with consumers and embracing transformative trends that promise to redefine banking operations and customer service in the years to come.
2025’s Greatest Opportunity: Harnessing the Power of AI
33% of bankers surveyed named AI 2025’s top technology trend. Generative AI applications, for example, promise hyper-personalized, around-the-clock service. If deployed well, this could enable community banks to level the playing field. From virtual assistants to content creation tools, the applications of generative AI are vast, offering banks newfound agility and efficiency in meeting customer needs.
By embracing these deep learning technologies, institutions can position themselves as leaders in innovation and customer-centricity, driving sustained growth and profitability in an ever-evolving landscape. However, time will tell how regulations and successful use cases permeate the industry.
2025’s Second-Greatest Opportunity: Real-Time Fraud Detection
As fraud continues to skyrocket, 17% of bankers selected real-time fraud detection as the top technology trend poised to affect the industry in 2025. FTC data showed consumers reported fraud losses totaling more than $10 billion in 2023, particularly in areas like check fraud.
Real-time fraud detection presents a valuable opportunity for community banks in 2025.
From synthetic identity fraud to check fraud, AI-powered solutions that analyze copious amounts of data stand to help institutions fight these evolving threats. Institutions should inform customers about these evolving fraud tactics.
Navigating the Road Ahead for Community Banking
From digital banking to AI and open banking, bankers are strategically engaging consumers and capitalizing on emerging trends, demonstrating measured confidence in navigating the ever-changing financial landscape.
Allison Maddock, Senior Vice President, Chief Product Officer, CSI
As a member of CSI’s executive leadership team, Allison uses her product management, strategy, operations and technology expertise to advance CSI’s products and services.
Email Allison at Allison.Maddock@CSIweb.com
Computer Services Inc. (CSI) is an associate member of the Indiana Bankers Association.
