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Chicago-based Alliant Credit Union has selected Jamie Warder as its chief information officer and head of business strategy, effective July 8. In his new role, Warder is responsible for the technology and business strategy at the $20 billion credit union, according to a company release. His experience as chief digital officer for KeyBank and time […]
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Vaidik Trivedi
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Goldman Sachs is recognizing opportunities for AI-related financing activities as companies continue to adopt the technology. “Recently, our board of directors spent a week in Silicon Valley, where we spoke with the CEOs of many of the leading institutions at the cutting edge of technology and AI, and we all left with a sense of […]
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Vaidik Trivedi
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The new Consumer Financial Protection Bureau rule putting buy now, pay later providers in the same category as credit card issuers can fuel the industry’s growth, experts say. The rule, published May 22 to take effect 60 days later, “makes the model more sustainable because [BNPL] has been around for a long time, it has […]
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Vaidik Trivedi
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The highly anticipated 2024 Jack Henry™ Strategy Benchmark results are in!
Jack Henry’s sixth annual study uncovers key insights and valuable takeaways from bank and credit union CEOs to help you capitalize on market shifts and new opportunities, refine your strategic plan, and compete successfully in 2024 and 2025.
Below are the key takeaways from the 2024 study.
Growing deposits is the top strategic priority for all financial institutions in 2024 and 2025. In fact, 72% of bank CEOs say growing deposits is paramount. As expenses put downward pressure on net income, banks rolled into 2024 with greater urgency around improving operational efficiency – the second top priority.
The top concerns for banks over the next two years are:
80% of all financial institutions plan to increase technology spend over the next two years, with fraud detection/mitigation, digital banking, and data analytics expected to be the top three technology investments in 2024 and 2025.
Plus, 92% of financial institutions plan to embed fintech into their digital banking experiences. plan to embed payments fintech, with banks specifically looking to fintechs for help with small and medium-sized business (SMB) services and treasury management.
Plans for launching Banking-as-a-Service (BaaS) business lines (to embed banking into third-party, non-bank brands) has been significantly tempered by increased regulatory scrutiny and related compliance costs introduced in 2023. In fact, only 30% of financial institutions cite BaaS plans in 2024 and 2025.
90% of financial institutions plan to serve a niche market over the next two years.
Most financial institutions (96%) plan to add payment services within the next two years. FedNow® Service is the top priority followed by digital card issuance, contactless cards, and same-day ACH. The percentage of bank CEOs planning 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 workflow and custom/automated financial spreading.
Although fraud is the leading technology investment planned for 2024 and 2025, all financial institutions agree check fraud is the biggest fraud threat, followed by romance/investment scams and account takeovers. Respondents cite social engineering of employees and data breaches as their top cyber threats this year and next.
In 2024 and 2025, strategic priority and technology investment plans mimic the market at large, as financial institutions are pressured to increase profitability and address non-interest income concerns while fighting to remain relevant through rising competition and turbulent market conditions.
The need to automate expensive and manually intensive processes is top of mind and top of budget for financial institutions as we round out 2024 and head into 2025. To this end, enterprise workflow, robotic process automation (RPA), Machine Learning (ML), and AI are in demand – not to mention strategic agility in the open-banking era of data-driven financial services.
Banks that proactively take advantage of market shifts are better positioned to capture upside potential and mitigate downside risk – no matter how the economy unfolds in 2024 and 2025.
Download the 2024 Strategy Benchmark to help you your strategy and compete more effectively.
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Jack Henry™
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In Informed’s 2023 loan technology survey, a noteworthy 68% of organizations reported harnessing the power of artificial intelligence (AI) in loan processing and funding. (This year’s report isn’t yet out, but spoiler alert – this number rose to 76%) The statistic underscores a significant shift in the industry towards embracing cutting-edge technology. However, equally compelling is the forward-thinking approach of 63% of organizations planning to leverage AI in securitization in the near future, followed closely by 62% in loan servicing and 61% in loan processing and funding.
This trend aligns with the dynamics of a fluctuating market where lenders are strategically positioning themselves to be agile while focusing on technology solutions that lower operational expenses. A closer look shows an uptick in financial services honing in on niche technology advancements and establishing strategic partnerships, showing the industry’s strategy to navigating a tightened economy.
Amidst this landscape, there’s a universal trend — a pursuit of more loans, less risk, and less fraud. It is imperative to sustain a focus on technology, but with an added emphasis on swiftly realizing return on investment (ROI).
We’ve seen the delicate balance between making technology investments and ensuring that financial institutions (FIs) thrive, progress, and maintain agility. There is also an ongoing debate between digital and paper processes.
Despite divergent opinions on the future, the ability to digitize paper and seamlessly integrate into existing workflows is now a must have. This allows FIs to remain competitive without requiring an entire infrastructure overhaul or a directional shift. In a not so surprising revelation, 55% of surveyed organizations express lingering concerns about fraud and compliance, highlighting the ongoing importance of addressing vulnerabilities.
In conclusion, the loan technology survey not only outlines the state of AI adoption but also shed light on the strategic foresight guiding organizations. The delicate balance between technology investment, agility, and addressing industry concerns remains at the forefront of financial institutions’ endeavors.
In 2024, the challenge is clear — staying ahead of trends, mitigating risks, and embracing technology that not only meets current needs but also propels the industry forward. Excited to see the results of Informed’s 2024 Technology survey and learn how far the industry has come.
Jessica is speaking at Bank Automation Summit and is available to chat.
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Informed.IQ
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As community and regional banks navigate 2023 and approach 2024, they’re setting their sights on critical priorities to chart their strategic direction – with a keen focus on:
• Growing deposits
• Growing loans
• Retaining talent
Jack Henry’s 2023 Strategic Priorities Benchmark Study found that 79% of financial institution CEOs surveyed plan to increase technology spend over the next two years, with a majority allocating investments between 6% and 10%. Specifically, banks cited growing deposits (52%) and growing loans (50%) as top strategic priorities for the next two years; and 45% reported talent acquisition and retention as their top concern.
Understanding the Study
The mission of the Strategic Priorities Benchmark Study is to help banks see around corners and strengthen relationships with the people and businesses they serve. By understanding their peers’ plans and priorities, banks can innovate faster, close strategic gaps, and capture market share amid ongoing disruption.
Strategically Grow Deposits
In response to Silicon Valley Bank’s collapse and Apple Card’s new high-yield savings account, banks are urgently focusing on strengthening deposit relationships and acquiring new accountholders. Targeted, tiered, and segmented deposit strategies are proving effective, with high-performing institutions exploring creative solutions like re-financing of CDs or hybrid bundles to offer attractive rates.
Expand Small- and Medium-Sized Business (SMB) Lending
With non-interest income under pressure and regulatory scrutiny on OD/NSF fees, banks who are leveraging digital-first, relationship-based banking will be the ones to expand and monetize SMB lending. Additionally, rising rates pose challenges for SMBs in securing loans, creating an opportunity for banks to reclaim market share lost to fintechs and neo-banks.
Acquire (and Keep) Talent
The tightening fintech market due to recession fears and rising interest rates has resulted in mass tech layoffs, providing banks with a unique opportunity to acquire tech talent. This talent pool is instrumental in driving ongoing digital transformation, pursuing niche strategies, and enhancing data analytics and cloud management capabilities.
As the financial landscape evolves, community and regional banks are actively adapting their strategies to seize new opportunities and stay ahead of customer demands. Embracing technology, cultivating talent, and prioritizing customer-centric solutions will be key to thriving in the rapidly changing financial ecosystem of 2023 and beyond.
Read the 2023 Strategic Priorities Benchmark Study for more on how you can see around corners, remain relevant, and capitalize on new opportunities as they emerge. Start strategizing today.
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Jack Henry™
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In the rapidly evolving world of banking and financial services, Agile and DevOps methodologies have emerged as essential tools to drive innovation and stay ahead of the competition. These revolutionary approaches to software development and project management have gained significant traction within the industry due to their ability to foster collaboration, accelerate time to market and deliver customer-centric solutions.
The traditional waterfall model of software development is becoming increasingly outdated and unsuitable for several reasons. It follows a linear, sequential approach to development, where each phase must be completed before moving on to the next. This rigid and inflexible structure is ill-suited for the rapidly evolving and dynamic nature of the financial sector. Banks and financial institutions, regardless of size, are investing heavily in Agile and DevOps practices. For example, JP Morgan Chase drives innovation in software development and delivery through these practices.
The banking industry faces unique challenges when it comes to adopting new methodologies like Agile and DevOps. Financial institutions handle vast amounts of sensitive data and are subject to strict regulations, making it imperative to ensure that the implementation of Agile and DevOps does not compromise data security and privacy.
In the United States, there are different regulations that govern the financial industry, including payment services. One of the key regulations in the U.S. related to payment services is the Electronic Fund Transfer Act (EFTA) and its implementing Regulation E. These regulations provide consumer protection and govern electronic funds transfers, including rules for automated clearinghouse transactions and electronic debit card transactions.
Another challenge is the need for flexibility and adaptability in a constantly evolving financial landscape. Market conditions, customer preferences and advancements in technology can change rapidly, and banks must be agile enough to respond quickly and effectively. The iterative nature of Agile and DevOps practices empowers banks to adapt their products and services in real time, meeting the dynamic and ever-changing demands of the market.
Implementing Agile and DevOps in the banking sector yields numerous benefits. Operational efficiency is improved significantly through continuous integration and automation, enabling faster and more frequent software releases. This leads to a reduced time to market for new products and services, helping banks gain a competitive edge.
Industry compliance standards such as EFTA and Regulation E may undergo updates or changes over time. DevOps enables financial institutions to respond rapidly to these regulatory modifications. By using continuous integration and continuous delivery pipelines, banks can quickly deploy changes, ensuring that their electronic fund transfer processes remain compliant.
Customer satisfaction is another area that benefits from Agile and DevOps. These methodologies allow banks to deliver products that align closely with customer needs, preferences and feedback. This customer-centric approach results in enhanced customer experiences and fosters customer retention.
Additionally, the focus on iterative development and continuous improvement promotes innovation. By encouraging experimentation and risk-taking, Agile and DevOps practices enable banks to explore new ideas and technologies, paving the way for groundbreaking innovations in the financial sector.
Implementing Agile and DevOps practices in the banking sector faces a significant hurdle in the cultural shift required to embrace these methodologies fully. Banks may have traditionally operated in a hierarchical and risk-averse manner, which can hinder the adoption of Agile and DevOps principles. It is important for leadership to drive the cultural change by promoting collaboration, experimentation and a learning-oriented environment.
Skill gaps and talent shortages are also potential roadblocks to implementation. Banks may need to upskill or hire personnel with expertise in Agile, DevOps and modern software development practices to ensure a smooth transition.
Stakeholder alignment is crucial for successful implementation. All teams and departments must be on board with the Agile and DevOps transformation, from top-level management to frontline employees. Effective communication and buy-in from all stakeholders are vital for the seamless integration of these methodologies.
Another pain point for banking and financial institutions is the complexity of legacy systems. Many financial institutions have extensive and intricate legacy IT infrastructures that were not designed to work with Agile and DevOps methodologies. Integrating these methodologies with existing systems and processes can be challenging and may require significant time and effort.
Agile and DevOps methodologies are inherently aligned with broader digital transformation strategies in the banking industry. Digital transformation aims to leverage technology to enhance operational efficiency, improve customer experiences and drive innovation. By adopting Agile and DevOps, banks can efficiently incorporate emerging technologies like cloud computing and artificial intelligence into their operations and customer-facing solutions.
The synergy between Agile and DevOps and these emerging technologies allows banks to experiment with new digital solutions rapidly and deliver value to customers faster. The continuous feedback and improvement loops fostered by Agile and DevOps are well-suited to optimizing digital transformation initiatives.
In the context of generative AI in banking, DevOps can streamline deployment and maintenance of AI models. DevOps practices enable continuous integration and delivery of AI solutions, allowing banks to quickly respond to changing market needs and iterate on AI models for improved accuracy and efficiency. This seamless integration of generative AI into the development and operations pipeline enhances agility and accelerates the realization of value from AI-driven digital transformation strategies.
The combination of Agile and DevOps methodologies provides a powerful framework for banking and financial institutions to navigate the challenges of the digital age successfully. By addressing industry-specific concerns, leveraging their benefits, overcoming implementation challenges and aligning with broader digital transformation strategies, banks can position themselves at the forefront of innovation and deliver exceptional customer experiences in an increasingly competitive landscape.
Rambabu Nalagandla is a lead solutions architect at Pilvi Systems Inc., with more than 19 years of experience in the banking and financial services industry. He has successfully guided leading banks through digital transformation, leveraging emerging technologies to drive operational efficiency and enhance customer experiences.
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Rambabu Nalagandla
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Vaidik Trivedi
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Auto Finance News, a sister publication of Bank Automation News, is pleased to announce that applications are now open for the 2023 Demo Challenge, which will take place at the Auto Finance Summit East on May 10-12 in Nashville, Tenn.
The sixth annual Demo Challenge offers startups in financial services and automotive to showcase their technology before of a large audience of auto lending and leasing executives at the conference.
Fintechs less than 7 years old with an eye toward consumer finance are invited to complete a short survey to be considered by the editorial team. Companies are required to present a live demo at the event.
Apply for the Demo Challenge here.
Previous winners of the Demo Challenge include lender EV Life, auto refinance provider Caribou, collections software Remitter, and blockchain company Bloom.
Visit autofinance.live to register.
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Joey Pizzolato
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The U.K.’s fintech sector was hit hard last year, with investment plunging 56% in 2022 to $17.4 billion from $39 billion the previous year, according to KPMG’s latest Pulse of Fintech report. The second half of 2022 suffered more due to the combination of higher inflation and interest rates as well as volatile stock markets; […]
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Lynn Strongin Dodds
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FinTech startups have brought a new level of innovation to core banking functions such as payments and lending, to name just two areas. Simplicity, ease of use, and speed have been critical to their success.
The rapid growth in digital banking (and the success of the upstart companies offering these services) have left established banks and financial institutions eager to protect their customer base – and hungry to compete on a more level playing field.
The secret to doing so is that there is no secret.
Emerging FinTech companies have built new services and offerings with customer experience at the forefront. These companies think more like software vendors than financial institutions and are carving into the profits and the very substance of what regional and community banks have done for generations.
These financial disruptors have none of the history, infrastructure, and trust of regional and community banks. But they also do not have the burden of legacy technology.
This eBook Guide, “Building the Digital Bank: A Roadmap to Modern Infrastructure for Regional & Community Banks,” explores the key questions facing established financial institutions looking to modernize:
The answer has multiple parts, but the good news is that the opportunity is there.
Start your journey with this roadmap to building the digital bank.
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KnowledgeLake
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Bank Automation Summit U.S 2023 is pleased to offer attendees the opportunity of a customized conference experience featuring two engaging tracks to choose from: Advanced Technology and Advanced Strategy.
The Summit will take place March 2-3 in Charlotte, N.C., at the Westin Charlotte. See the full agenda here.
The two tracks of sessions will take place concurrently. The Advanced Technology track will include panel discussions — with executives from KeyBank, BankUnited and more — on innovations in business intelligence and strategies for addressing legacy core systems. Panelists will dive into:
The Advanced Strategy track will feature panel discussions on automation operations and topics including:
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Whitney McDonald
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