CSI’s annual report also showed a growing interest in and concern over artificial intelligence applications as community bankers explore automation and other back-office technologies to drive deposit growth and fight fraud

CSI, a leading provider of end-to-end financial software and technology, today released its 10th-annual Banking Priorities Executive Report, which surveyed 250 community bankers at the manager level or above at asset sizes ranging from $100 million to $10 billion. The survey is designed to understand the top challenges, priorities and technological investments that will drive all segments of the community banking market in 2025. Of the respondents, 31% represented community banks with asset sizes between $500 million and $1 billion, while 39% represented banks with between $1.1 billion and $5 billion in assets.

The report revealed that community bankers are almost universally focused on modernizing their core banking solutions to improve operational efficiency and grow deposits—the top two strategic goals in 2025 as selected by 44% and 40% of respondents, respectively. Banks with asset sizes between $500 million and $5 billion were most likely to select operational efficiency as their highest strategic priority. Overall, only 2% of respondents said they had no plans to modernize in the next 12 months.

“The results of this year’s report mirror what we see and hear from our customers in communities across the country,” said David Culbertson, president and CEO of CSI. “Even as community financial institutions face tight regulations, an uncertain rate environment and concerns over fraud, they are prioritizing innovation and technologies they need to grow. As we enter the new calendar year, we look forward to working closely with our customers to address their largest opportunities on the path to modernization.”

Focus grows on back-office technologies and efficiency

Banking-as-a-service and open banking technologies also remain priorities for banks as they modernize, especially among larger financial institutions. Respondents working at banks with asset sizes between $5 billion and $10 billion were most likely to select using or expanding the use of integrated solutions supported by open APIs.

Bankers are increasingly prioritizing back-office technologies to achieve efficiency and growth. Forty-three percent said they would explore efficiency drivers like automation and artificial intelligence (AI) and 42% plan to place heavier emphasis on data and analytics—both up slightly from last year.

Conversely, many banks are deprioritizing other functions such as digital account opening, in-branch technologies and digital lending, all of which saw moderate decreases among respondents year over year. The downward trend across more customer-facing technologies suggests the possibility that banks have already made significant investments in these areas or that the current interest rate environment has necessitated a shift in priorities for some institutions.

Bankers recognize AI’s potential—but concerns remain

For the second consecutive year, bankers cited artificial intelligence as the most impactful technology trend at 33%, followed by real-time fraud detection at 17%. Most are interested in deploying AI-driven technologies for fraud and anti-money laundering detection and prevention (91%) or customer service (90%). Eight in 10 respondents expressed at least some level of concern about AI’s potential in banking as they evaluate its benefits and potential use cases in an evolving regulatory and compliance landscape.

Overall, fraud continues to rise as bad actors grow more sophisticated. Card and check fraud continue to be the most common types of fraud at 44% each. Fraudulent account opening is also a chief area of risk affecting about four in 10 banks.

Similarly, community bankers believe cybersecurity and data privacy to be the issues that will affect the industry most in 2025, with 28% citing it as the most important concern, followed by interest rates (19%) and regulatory change (14%).

To learn more, access the report here or register for CSI’s Banking Priorities webinar on Jan. 15, 2025. For more information on CSI, visit csiweb.com.

About CSI

As a forward-thinking software provider, CSI helps community and regional banks, as well as organizations worldwide, solve their customers’ needs through open and agile technologies. In addition to its nearly 60-year reputation for personalized service, CSI is shaping the future of banking by swiftly deploying advanced solutions that help its customers rival their competition.

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