Is Your Bank Ready for Growth?
To discover how banks will evolve in 2025, we first must understand the broader goals. In the wake of the 2023 bank failures, distrust flooded the industry. Moving forward, the banks that win will be focused on the following goals that are proven to drive growth:
Deposit Growth
Growing deposits continues to be a top concern and area of focus for most banks. Financial institutions are finding themselves in a high-stakes competition with fintechs and neobanks, where offering attractive rates alone is no longer sufficient to grow deposits. Strategies for how to grow deposits will be put into action, using AI and data analytics to find opportunities and create efficiencies.
Customer Acquisition
The banking landscape has undergone a radical transformation as fintech disruptors and non-traditional players reshape customer expectations with innovative, digital-first approaches. Regional banks now face unprecedented pressure to modernize as they compete for customers against nimble startups offering seamless digital experiences and attractive rates.
Cost Reduction
Cost reduction through operational efficiencies has become an increased area of focus for banks. Regulatory compliance costs have steadily risen, causing banks to seek ways to minimize operational expenses. Improving the customer experience, increasing operational efficiencies and modernizing technology are all ways banks will be streamlining their compliance processes and reducing costs.
A Catalyst for Change
As banks continue to strive to achieve these goals, there are infinite ways to move forward. The one that will move the needle, however, is putting the user and employee experience at the center of their strategy.
The human experience will be the catalyst for change.
These trends will show us how.
2025 Banking Trends to Support Bank Growth
Banking Trend #1 – Customer Experience Evolution
Despite increased investment in digital tools and platforms, banks aren’t seeing the growth they anticipated. This tells us that digital investment alone isn’t enough to drive growth. That’s why, in 2025, we’ll see banks increase their focus on CX evolution.
Customer experience improvement can be a hurdle for banks. It can feel insurmountable, not to mention expensive. Finding the balance between a local presence and meeting digital expectations is a fine line to walk. But if you start small, utilizing your data and investing in research, banks can start to move in the right direction.
A focus on CX hinges on three core components:
Strengthening foundations – A strong foundation requires understanding the target customers’ needs and upgrading platforms strategically rather than implementing generic solutions.
Creating impact – This involves identifying and capitalizing on key customer interaction moments through enhanced digital services and self-service capabilities.
Personalizing experiences – This final component involves using data-driven insights and flexible technology to anticipate customer needs and deliver tailored experiences across both personal and commercial banking channels.
Banking Trend #2 – Platform Migration
Regional banks face significant challenges in modernizing their core banking platforms. High costs, operational risks, technical complexity and system integration from acquisitions all pose challenges to updating legacy systems. Additionally, institutions must maintain uninterrupted services during migration while meeting stringent regulatory requirements. All of this leaves many banks hesitant to undertake comprehensive modernization despite the competitive disadvantages of outdated systems.
When selecting best-in-class platforms, it is crucial to focus not only on the technology itself but also on the people who will use it. Banks must humanize their digital transformation efforts to meet the specific needs of both external and internal users. Considering the end-users is just as important as modernizing the technology.
Despite all of these challenges, we will see a trend of more banks moving to optimize their core platforms in 2025, driven by the need to stay competitive in the market. According to Gartner’s 2023 banking technology survey, 53% of banks planned to increase their core modernization investments in 2024. And that number is only going to grow in 2025.
Banking Trend #3- Advances in AI
It may seem strange to call AI a trend since we know it’s here to stay. It will only continue to become increasingly powerful and more useful with every new update and release. Banks are just beginning to realize AI’s potential, but many can struggle to know where to start.
According to The Economist fraud detection is the top application of AI for banks (57%). And the same article states AI is used by 54% of banks to optimize IT operations. Almost all banks currently use AI to some extent, or they plan to in the next three years. The uses span from operations to customer experience and are growing on a near constant basis.
One thing that will help banks win at AI is to see AI for what it is, a powerful tool, not a strategy. It’s important for regional banks to focus on the problems they need to solve first and foremost and then figure out where and if AI can be applied to solve that particular use case. In many instances it’s going to be yes, but not all. And it’s important to prioritize which AI investments will bring the most value to the customer and ultimately the business.
Banks should be making plans now on how they will incorporate this tool into their 2025 solutions.
Banking Trend #4 – Advances in Data
The importance of data in utilizing AI and improving CX makes it a necessary trend for any bank looking to meet their goals in 2025. To effectively use AI, or undertake a CX transformation, the first step is always data. The right data, organized effectively and intuitively, will be the catalyst for understanding which parts of a bank’s customer experience need the most immediate attention or which problems AI needs to solve. From robust customer insights to risk management, advanced analytics are changing the way banks make decisions across their enterprise.
At G2O, We Know Banking.
We’re a banking consultant partner who can help you capitalize on these trends and drive growth for your bank. We tailor products & experiences that help customers achieve their financial goals.
Imagining, designing and developing seamless experiences across all channels, we enable our banking clients and remove barriers to execution. We understand the foundational customer journeys that fuel engagement across services while knowing the systems and platforms that are critical to enabling the omnichannel banking experience.
Leaning into these trends will be what helps regional banks reach their growth goals in 2025. Moving at the speed of technology, banks are poised to benefit from digital advances as long as they adhere to the primary goal of enhancing the customer experience.
Contact us to learn more about how we can partner with you to seize these opportunities.