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 (DLP) 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, which the following discusses, 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 TOP CHALLENGES AND OPPORTUNITIES FOR COMMUNITY BANKS IN 2025 BY ALLISON MADDOCK SENIOR VICE PRESIDENT AND CHIEF PRODUCT OFFICER, CSI 14 In Touch
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