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Reducing Risk & Fraud

The Results Are In: The Jack Henry™ 2024 Strategy Benchmark

Jennifer Geis
Jun 7, 2024

Our annual Strategy Benchmark is here!

Dive into key takeaways and valuable insights from the sixth annual Jack Henry Strategy Benchmark, designed to identify the top strategic priorities for bank and credit union CEOs. Discover the cutting-edge technology your peers plan to execute in 2024 and 2025, along with innovation concerns, top performance metrics, and more to help you compete effectively and differentiate strategically.

Results are based on an online survey conducted with Jack Henry's core clients during January and February 2024. The survey pool consisted of 127 bank and credit union CEOs across the U.S., with assets ranging from less than $500 million to more than $10 billion.

Below are the key takeaways from the study: 

  • Growing deposits is the top strategic priority for all financial institutions in 2024 and 2025. This year, 72% of bank CEOs and 44% of credit union CEOs say growing deposits is paramount.
  • With expenses putting downward pressure on net income, banks and credit unions rolled into 2024 with greater urgency around improving operational efficiency – the second and third top priorities respectively.
  • 80% of all financial institutions plan to increase technology spend over the next two years, but credit unions are more bullish on budgets, with 37% planning to increase tech investments between 6% and 10%, while only 30% of banks are targeting that investment level. In fact, most banks (37%) plan to increase their investments between 1% and 5%.
  • Fraud detection/mitigation, digital banking, and data analytics are the top three technology investments planned over the next two years. Relative to banks, credit unions give outsized priority to investments in artificial intelligence (AI). Consistent with past years, credit unions are also allocating more of their budgets to data analytics and automation relative to banks.
  • Net interest margin (NIM) compression and deposit attrition/displacement are the top two concerns for banks and credit unions alike, with banks somewhat concerned about talent acquisition/retention while credit unions worry more about price compression on financial services and rising loan delinquencies/write-offs.
  • Both bank and credit union CEOs are less concerned about an economic slowdown this year versus last year.
  • NIM is the key performance metric for banks in 2024 and 2025, while credit unions are more focused on return on assets (ROA). This comes as no surprise, given the ROA for credit unions declined in 2023 due to higher operating and provision expenses offsetting their improving NIM.
  • 92% of financial institutions plan to embed fintech into their digital banking experiences, with the majority planning to embed payments fintechs.
  • Credit unions are looking to embed consumer financial health and digital marketing fintechs while banks are 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, 52% of respondents had BaaS on their strategic radar last year, while only 30% of CEOs cite BaaS plans for 2024 and 2025, and 70% indicating they have no plans to offer BaaS over the next two years.
  • 90% of financial institutions plan to serve a niche market over the next two years, with both banks (86%) and credit unions (59%) targeting businesses and 78% of all respondents reporting plans to expand services for SMBs (including payments, business credit/lending, and merchant services).
  • 96% of financial institutions plan to add payment services within the next two years, with FedNow® Service being the top priority for both banks and credit unions followed by digital card issuance, contactless cards, and same-day ACH to round out the top payments priorities for 2024 and 2025.
  • The percentage of bank CEOs planning to add real-time payments from The Clearing House doubled this year, while credit union CEOs expressed greater interest in adding a P2P alternative to Zelle®.
  • 97% of all financial institutions plan to enhance their lending capabilities, with priorities diverging sharply and predictably between banks and credit unions. In fact, banks are focusing on automated workflow and custom/automated financial spreading while credit unions are focusing on underwriting using AI and automated pre-qualification campaign
  • 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.
  • Both banks and credit unions cite social engineering of employees and data breaches as their top two cyber threats this year and next. Relative to banks, credit unions are maintaining significant vigilance about ransomware.

Overall, the strategic priorities and technology investment plans for 2024 and 2025 mimic the market at large, as financial institutions are pressured to increase profitability, address non-interest income concerns, and fight 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.

Proactively take advantage of market shifts and better position yourself 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 adjust and set your strategy and compete more effectively.

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