The concern for deposits seems to be taking over the headlines lately.
A recent report by Jack Henry™ reveals the biggest strategic priority among bank and credit union CEOs is growing deposits.
Considering U.S. banks lost $472 billion in deposits in the first quarter of 2023, their intent is well warranted. This deposit decline was the largest in 39 years (since the FDIC began collecting quarterly industry data in 1984). Although the decline has not been as sharp during the second quarter of 2023, it’s still a major concern.
In addition to the gap in deposits, financial institutions continue to see new competition entering.
Fintech firms are the biggest competitive threat among CEOs according to the 2023 Jack Henry Strategic Priorities Benchmark Study. What’s more, is a recent survey from Bank Director indicates 42% of banks consider neobanks, such as Chime, a top competitive threat – especially when competing for consumer deposits, while 31% considered payment providers such as Square and PayPal main competitors.
Apple is also making advances in its competitive stance in a big way with a recent announcement of its savings account, which brought in $5B in deposits since its launch in April – offering a high-yield APY of 4.15%.
To gather deposits and remain competitive, you must continue to invest in digital enhancements.
Digital banking leads in top investment spend by both banks and credit unions with 90% of financial institutions planning to embed fintechs into their existing digital banking experience.
While leading technologies include payments (65%), digital marketing (60%), and consumer financial health (64%), branches still play a critical role. Although digital spend is increasing, branches are considered equally significant. As a matter of fact, a recent Bank Director study shared almost 50% of financial institutions said the digital and branch channels are similarly critical to their growth strategy.
Payments remain to be a priority in 2023 and 2024.
Emerging payment rails such as real-time payments and P2P must co-exist with legacy payment types such as ACH and card, with financial institutions and accountholders alike struggling to make sense of differing payment types, settlements, speed, and cost.
According to the Jack Henry Strategic Priorities Benchmark Study, 90% of financial institutions have plans to add a new payment type within the next two years, with FedNowSM Service ranking as the number one payments service planned (66%), followed by contactless cards (46%) and a P2P alternative to Zelle coming in third (35%).
Many financial institutions struggle with having the proper tools and solutions in place to serve younger demographics, specifically Gen Z. In fact, only 18% of banks feel confident they have the tools in place to effectively serve Gen Z, with 29% unsure and 53% stating they’re not confident they have the right tools in place.
Furthermore, 75% of banks within the $5-$10B asset range feel unprepared to serve Gen Z.
 Apple Card’s Savings account by Goldman Sachs reaches over $10 billion in deposits, Press Release, accessed September 29, 2023.
 FIS Worldpay, Global Payments Report, May 2023
 Javelin Strategy & Research, 2023
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