The landscape of digital banking is evolving.
The 2025 Jack Henry™ Strategy Benchmark reveals a clear mindset shift: instead of rushing to adopt the latest technologies at any cost, financial institutions are prioritizing more strategic, purpose-driven investments. The focus is now on optimizing and refining existing tools and platforms to better align with long-term strategies and goals. This strategic pivot is reflected in a deceleration of annual growth in IT budgets – reaching a median of just 4% in fiscal year 2024.
Fueling this transformation is the rise of AI-enabled solutions.
With the potential to reduce operational expenses through automation and deliver hyper-personalized experiences for accountholders, AI tools are helping banks and credit unions create more value with each investment dollar. This potential isn't going unnoticed, with 40% of financial institutions planning to make AI a top five investment over the next one to three years.
Consumer and business expectations for digital platforms continue to climb.
In today's competitive market, offering basic or impersonal services risk losing users to more polished alternatives.
The future lies in platforms that prioritize addressing financial needs first and offering tailored products and solutions second. Banks and credit unions embracing relationship-based banking – enhanced with the benefits of open banking and embedded finance – are better positioned to build trust, brand loyalty, and ongoing engagement.
It's crucial to avoid the "feature creep" that bloats offerings without adding value.
By prioritizing the accountholder experience and focusing on their evolving needs, you can drive continuous engagement – transforming one-time transactions into lasting relationships. The approach not only addresses financial fragmentation but also re-establishes you as a central, trusted partner in your accountholders' financial lives.
A core element for delivering engaging and personalized experiences is the collection, orchestration, and analysis of proprietary data, such as goals, spending habits, and app interactions. This data is key to better understanding your accountholders' needs and addressing the pain points in their digital journey.
In an oversaturated market, data-driven insights are essential for differentiating your platform.
The challenge is that the average consumer has between 15 and 20 financial relationships, meaning no single financial institution has access to the majority of their financial data. This fragmentation is particularly true with younger generations.
As open banking rails help overcome this fragmentation, breaking down siloes to bring together data from disparate sources is crucial to centralizing data, enabling the creation of hyper-personalized experiences, and tailoring your marketing efforts to each unique user.
Setting realistic benchmarks is also important in this crowded market.
Trying to be all things to all users can dilute your value. The key to maintaining a strong, competitive edge is clearly defining your target market. By understanding who your ideal users are and focusing on their specific needs, you can streamline your products and services to offer unique, valuable, and necessary competitive features. Additionally, studying successful players in the same niche provides insights into what works – highlighting the features and strategies that resonate with your audience.
This focused approach allows you to develop a more compelling value proposition, ensuring your products remain highly relevant, effective, and aligned with long-term success.
If your key competitive functionalities are missing or lagging behind your peers, third-party vendors and embedded finance solutions can bridge that gap.
Fintech partnerships were cited as a driver of growth by 83% of credit unions and 60% of banks in 2025.
These partnerships can speed up time to market, reduce operational and regulatory burdens, and leverage the specialized expertise of fintechs for favorable outcomes. In fact, nearly all financial institution CEOs surveyed (94%) plan to embed fintech into their digital banking solutions. While the specific types of fintech vary between banks and credit unions, the majority are prioritizing embedding digital account opening, followed by payments and digital marketing.
As we look to the future, digital account opening emerges as the nexus of efficiency, growth, and user experiences.
As digital banking increasingly focuses on enhancing feature quality and refining the overall accountholder experience through partnerships, personalization, and engagement, digital account opening is set to play a big role in 2025 and 2026 tech plans.
This focus allows you to target specific niches and segments while nurturing sticky, consumer-centric relationships.
While embedding fintech into their own digital solutions is a priority, the outlook on embedding their services into third-party, non-financial brands is more cautious. In fact, many banks and credit unions have no plans to do this in 2025 and 2026.
Those who do plan to embed banking/finance services are primarily targeting Payments-as-a-Service (PaaS).
This cloud-based solution helps banks and credit unions offer fast, secure, and scalable payment capabilities without the heavy lift of building the infrastructure themselves. By adopting PaaS, you can cut costs, speed up innovation, deliver better experiences for your accountholders, and stay competitive with fintechs and digital-first challengers.
Banking-as-a-Service (BaaS) adoption is progressing slowly. While more than 25% of banks are actively exploring BaaS – embedding financial services into non-bank platforms – many leaders remain hesitant. Notably, the percentage of CEOs choosing not to pursue BaaS strategies has risen from 69% in 2024 to a projected 71% by 2026.
This hesitation is largely driven by rising regulatory scrutiny and associated compliance costs, making BaaS a concept that remains complex and challenging to implement at scale.
Download the 2025 Strategy Benchmark to unlock the full picture of bank and credit union priorities, investment plans, and the details behind emerging trends.
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