Facing rapid technological change and shifting consumer preferences, banks are doubling down on reducing manual processes and taking advantage of efficiencies created by automation. Continued adoption of open banking, enhanced cybersecurity and evolving regulatory concerns broaden the areas of focus financial institutions must consider when developing their strategies. But these areas also represent a tremendous opportunity for those that adapt.

CSI’s Banking Priorities Survey—which asked community bankers nationwide about their strategies and priorities for 2025—captured their pulse and plans for the year.

In this blog, we explore how bankers are gearing up to tackle some of the complexities of 2025 and position themselves for success. Check out the interactive 2025 Banking Priorities Executive Report for a deeper dive into the strategies and emerging opportunities associated with a changing technology landscape, AI, cybersecurity, regulatory changes and more.

What Did Bankers Identify as Top Issues for 2025?

Bankers identified cybersecurity/data privacy and interest rates as the industry’s top two issues this year.

2025’s Foremost Challenge: Cybersecurity/Data Privacy

According to findings from CSI’s Banking Priorities Executive Report, 28% of community financial professionals listed cybersecurity/data privacy as the most pressing issue, surpassing all other concerns.

Impact of Cybersecurity/Data Privacy on Community Banking

Although we’ve made advancements in cybersecurity monitoring technology, cyberattacks continue making headlines and plaguing institutions of all sizes. Since banks hold sensitive customer data, including account details, they remain attractive targets to cybercriminals. The average cost of a data breach in the financial services industry rose from $5.9 million in 2023 to $6.08 million in 2024.

And institutions have to look beyond the financial repercussions of a breach. A successful cyberattack can open an institution up to reputational and legal consequences as well. The rise of hybrid and remote work paired with consumers’ reliance on digital channels has increased the surface for attacks, representing additional risk. Further, regulators are increasingly focused on stricter compliance requirements to protect consumer data, adding pressure to banks to comply.

Cybersecurity Strategies in Motion

To stay competitive and secure, bankers must prioritize investments in advanced technologies like risk assessments and other cybersecurity tools, employee training, and proactive threat detection systems to safeguard data and uphold trust in an increasingly digital economy.

Tackling Cybersecurity/Data Privacy Challenges Head-On

To keep up with the evolving cybersecurity threat landscape, institutions need around-the-clock monitoring and response. A managed cybersecurity monitoring platform helps institutions identify anomalies and send alerts for investigation to ensure the threat doesn’t spread. Solutions like data loss prevention (DLP) help institutions protect their data and control how it’s shared. Implementing good cyber hygiene is another effective strategy to improve security and keep employees and consumers safe.

2025’s Second Most Significant Challenge: Interest Rates

Interest rates also remain a significant concern, securing the second-highest position on the list of critical challenges facing bankers in 2025.

Impact of Interest Rates on Community Banking

Interest rates surged in 2022 and 2023, a consequence of the Federal’s Reserve’s efforts to curb inflation, has created a challenging environment for community banks. Bankers’ concern for interest rates has lowered since 2023, potentially due to stabilized rates and anticipated future rate changes from the Fed.

The impact of higher interest rates is multifaceted, affecting loan portfolios, funding sources, net interest margins and overall revenue for banks.

Strategies to Cope with Interest Rates in Motion

The effects of higher interest rates are nuanced, varying based on factors such as the composition of loan portfolios and funding sources. One noteworthy consequence is the strain of an inverted yield curve, where short-term borrowing costs for banks outpace returns from long-term loans.

This phenomenon is squeezing the net interest margin for many community banks, especially those relying on short-term borrowing. It also slows lending demands, thereby impacting overall revenue. Customers seeking higher yields may also shift their money to other accounts, affecting banks’ liquidity and ability to make new loans.

In response to this challenge, banks are deploying various strategies, such as offering competitive interest rates on deposits and exploring new interest income opportunities.

Tackling Interest Rate Challenge Head-On

Recognizing the potential economic downturns associated with a high-interest rate environment, banks are adopting a cautious stance in extending loans. This economic uncertainty is prompting a prioritization of digital account opening and related technologies, emphasizing gaining new accounts and low-interest deposits.

Institutions should evaluate opportunities within their existing market and portfolio. Offsetting decreased interest revenue requires strategic thinking, prompting some banks to seek higher-yield investments such as loans with variable interest rates. Diversifying portfolios through resources like lending marketplaces is another avenue institutions are exploring to weather the effect of high interest rates.

What Are Bankers’ Top Technology Investments for 2025?

Financial institutions are doubling down on digital-first technology investments to meet the evolving needs of a convenience-driven, tech-savvy clientele. As revealed in our Banking Priorities Executive Report, bankers are prioritizing efficiency drivers and data analytics to stay competitive in 2025.

2025’s Leading Investment: Efficiency Drivers like Automation or AI

At the forefront of technology investments lies efficiency drivers like automation or AI, with 43% of bankers acknowledging its importance. Most banks are seeking efficiencies in back-office processes, with some beginning to utilize AI and automation to remove manual steps and add new functionality.

Strategies for Driving Efficiencies in Motion

As banks experience increased competition and market pressure, many are exploring how AI and automation can help increase efficiencies to remain competitive, reduce operational costs and enhance customer experience. The rise of generative AI tools, which we discuss further below, offers the potential for heightened efficiency in the banking sector. Today, by harnessing automation, banks can streamline processes, enhance customer interactions and bolster fraud detection efforts.

2025’s Second Highest Ranking Investment: Data Analytics and Reporting

Garnering 42% of the vote, data analytics and reporting are transforming banking and customer experience. Data analytics and reporting provides banks with insight to understand customer behavior and identify areas to better serve them, including customizing offerings and promoting them via the digital experience. Analyzing data to create a personalized experience for customers to meet their needs also helps institutions solidify relationships and decrease attrition.

Strategies for Data Analytics and Reporting in Motion

Using data analytics and reporting to provide personalization throughout the digital experience is the core of digital engagement. To improve digital engagement, banks should strive to provide unique solutions to best serve customers and increase the adoption of those services. The more personalization banks build into their products and experiences, the more they will drive engagement, adoption and loyalty. Personalization builds trust, leading to less attrition and increasing the adoption of new products.

What Are Bankers’ Top Opportunities for 2025?

Bankers are strategically engaging with consumers and embracing transformative trends that promise to redefine banking operations and customer service in the years to come.

2025’s Greatest Opportunity: Harnessing the Power of AI

33% of bankers surveyed agreed that AI is 2025’s top technology trend. For community banks grappling with limited resources, AI-powered tools present a unique opportunity to level the playing field against big banks by offering assistance and smart automation. Generative AI applications, in particular, hold the promise of hyper-personalized, around-the-clock service, enabling banks to leapfrog their capabilities and retain a competitive edge. From virtual assistants to content creation tools, the applications of generative AI are vast, offering banks newfound agility and efficiency in meeting customer needs.

AI Strategies in Motion

Strategically deploying AI and ML can unlock productivity gains, streamline processes and empower banks to make data-driven decisions. By embracing these deep learning technologies, institutions can position themselves as leaders in innovation and customer-centricity, driving sustained growth and profitability in an ever-evolving landscape. However, time will tell how regulations and successful use cases permeate the industry.

2025’s Second-Greatest Opportunity: Real-Time Fraud Detection

As fraud continues to skyrocket, 17% of bankers selected real-time fraud detection as the top technology trend poised to affect the industry in 2025. Check fraud continues to plague institutions, with FinCEN reporting $688 million in reported suspicious activity related to mail theft-related check fraud. Further, FTC data showed consumers reported fraud losses totaling more than $10 billion in 2023.

Among the most reported fraud types, card fraud (44%), check fraud (44%), fraudulent account opening (40%) and wire transfer fraud (39%) emerged as primary concerns.

Real-Time Fraud Detection Strategies in Motion

From synthetic identity fraud to check fraud, AI-powered solutions that analyze copious amounts of data stand to help institutions fight back against these evolving threats. By enabling real-time detection, AI fraud tools accelerate investigation and help institutions limit their financial losses.

Financial institutions should also educate their customers about misinformation and nefarious financial schemes. Scams and dubious “hacks” circulate quickly on social media, but institutions that provide consumers with information can mitigate while increasing the potential for new business as a trusted resource.

Navigating the Road Ahead for Community Banking

As the banking industry charts its course through 2025, strategic foresight and adaptability are key. By confronting challenges head-on, making strategic investments and embracing emerging opportunities, banks can pave the way for sustained growth and competitiveness.

Despite the challenges, a spirit of resilience prevails among community financial professionals with 91% of bankers expressing overwhelming optimism for the future. From digital banking to AI and open banking, bankers are strategically engaging consumers and capitalizing on emerging trends, demonstrating measured confidence in navigating the ever-changing financial landscape.

Want the Full Results of the 2025 Banking Priorities Survey?

This blog only scratches the surface of the depth of information uncovered in the 2025 Banking Priorities Survey. Bankers have provided a wealth of knowledge regarding their technological investments, latest strategies and emerging trends spanning modern banking, cybersecurity, compliance and beyond. Unlock the complete the 2025 Banking Priorities Executive Report today.

Read the report