Jack Henry Releases Benchmark of Bank and Credit Union CEOs' Top Priorities

Rhea-AI Summary

Deposits, loans, data, and efficiency are identified as the top strategic priorities for community and regional financial institutions. 79% of financial institutions plan to increase their technology spend over the next two years, with digital banking, fraud and security, and data analytics as the top three technology investments. Banks and credit unions differ in their top concerns, with banks focusing on talent retention, NIM compression, and regulatory changes, while credit unions worry about an economic slowdown and delinquencies. The study highlights the importance of technology in improving deposit retention and acquisition, as well as the need to modernize tech infrastructure for strategic agility and real-time data analytics.

Positive

• Deposits, loans, data, and efficiency identified as top strategic priorities
• 79% of financial institutions plan to increase technology spend
• Digital banking, fraud and security, and data analytics are top technology investments
• Banks focus on talent retention, NIM compression, and regulatory changes
• Credit unions worry about economic slowdown and delinquencies
• Importance of technology in improving deposit retention and acquisition
• Need to modernize tech infrastructure for strategic agility and real-time data analytics

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• None.

Research identifies financial institutions' strategic priorities for 2023 and 2024

MONETT, Mo., May 25, 2023 /PRNewswire/ -- Deposits, loans, data, and efficiency top the list of strategic priorities for community and regional financial institutions, according to Jack Henry's fifth-annual survey of bank and credit union CEOs.

The survey provides a peer benchmark for strategic planning, which financial institutions can use to pinpoint emerging areas of opportunity and allocate technology investments. In addition to providing high-level insights, the survey focuses on key competencies across technology infrastructure and major business lines, including core, open banking, digital, lending, payments, and risk, fraud, and security.

Key takeaways from the Strategic Priorities Benchmark Study:

• While growing deposits topped the list of priorities for banks, leveraging data was the top priority for credit unions. Growing deposits also ranked as the most difficult priority to achieve.
• 79% of financial institutions (FIs) plan to increase their technology spend over the next two years; digital banking, fraud and security, and data analytics are the top three technology investments planned.
• Beyond a shared fear of deposit attrition and displacement, banks and credit unions differ in their top concerns. Banks' top concerns include talent retention, NIM compression, and regulatory changes, while credit unions' biggest worry is an economic slowdown – and a related rise in delinquencies.
• 90% plan to embed fintech into their digital banking experiences, with 65% planning to embed payments fintechs.
• 65% plan to expand services for small and medium-sized businesses (SMBs); commercial lending tops the list of SMB services FIs plan to add.
• Phishing and real-time payments top the most concerning fraud/security threats.  

The study's lead authors, Lee Wetherington, senior director of corporate strategy at Jack Henry, and Jennifer Geis, senior strategy analyst at Jack Henry, say last year's inflection points – changes in the business environment that required FIs to make significant adjustments to their operation and management – gave rise to distinct market shifts that are creating new opportunities for banks and credit unions in 2023 and 2024. Inflation, rising rates, and deposit churn have created a series of knock-on effects upon which financial institutions can capitalize.

"Like all change, inflection points create fear, uncertainty, and doubt. The instinctive response is one of withdrawal and retrenchment," the report states. "As a financial institution, however, you are uniquely positioned to lean on your risk competence and capital reserves to tap upside potential while less experienced, unchartered, and poorly capitalized providers struggle."

"For 2023, the top priority is technology that improves deposit retention and acquisition," Geis says. "That means options for automated savings and investments, the ability to receive real-time payments when FedNow^SM launches, and shoring up deposit gaps among Gen Y and Gen Z with early-paycheck access and mobile-only account opening that doesn't require funding upfront."

Wetherington said that, "While improving digital products and services has been the focus over the past few years, the flux of both 2022 and 2023 has shifted focus down stack to modernize tech infrastructure in service of strategic agility and the real-time data analytics necessary to fight fraud, improve UX, and establish intra-day visibility into balance-sheet KPIs, including and especially deposit inflows and outflows.

"Financial institutions who proactively take advantage of market shifts are better positioned to capture upside potential and mitigate downside risk – no matter how the economy unfolds in 2023," he added.

The study's results are based on an online survey conducted with core clients between January and March 2023; the survey sample included Jack Henry's core clients across the U.S. with assets ranging from $500M to $50B. Visit the Jack Henry website to download the full eBook and learn more.

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 46 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 8,000 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.

Statements made in this news release that are not historical facts are "forward-looking statements."Because forward-looking statements relate to the future, they are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, those discussed in the Company's Securities and Exchange Commission filings, including the Company's most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Any forward-looking statement made in this news release speaks only as of the date of the news release, and the Company expressly disclaims any obligation to publicly update or revise any forward-looking statement, whether because of new information, future events or otherwise.

                                                                                                             

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SOURCE Jack Henry & Associates, Inc.

FAQ

What are the top strategic priorities for financial institutions?

Deposits, loans, data, and efficiency are identified as the top strategic priorities for community and regional financial institutions.

What percentage of financial institutions plan to increase technology spend?

79% of financial institutions plan to increase their technology spend over the next two years.

What are the top technology investments planned by financial institutions?

The top three technology investments planned by financial institutions are digital banking, fraud and security, and data analytics.

What are the top concerns for banks and credit unions?

Banks focus on talent retention, NIM compression, and regulatory changes, while credit unions worry about an economic slowdown and delinquencies.

What is the importance of technology in improving deposit retention and acquisition?

The study highlights the importance of technology in improving deposit retention and acquisition.

What is the need for financial institutions to modernize tech infrastructure?

Financial institutions need to modernize tech infrastructure for strategic agility and real-time data analytics.