Here’s the tea: Financial institutions are finally realizing they’ve got a fight on their hands.
And their response? Throw money at the problem—specifically, technology money.
Jack Henry just dropped the results from their eighth annual Strategy Benchmark survey, and the findings paint a picture of an industry that’s equal parts anxious and ambitious. They surveyed 193 executives from banks and credit unions, and what emerged is a sector laser-focused on three things: running leaner operations, growing deposits, and rolling out payment services that don’t feel like they’re stuck in 2015.
The Budget Floodgates Are Opening
Remember when IT budgets were the first thing to get slashed when times got tough? Those days are gone. A whopping 88% of financial institutions plan to increase their technology spending over the next two years—that’s up from 76% last year. Even more telling: 41% are planning increases between 6% and 10%, compared to just 33% a year ago.
Translation? Banks and credit unions are done playing it safe.
AI Takes the Crown
For the first time ever, artificial intelligence topped the list of planned technology investments, with 48% of institutions putting it at number one. Digital banking came in second at 38%, followed by data analytics at 32%. It’s like watching everyone suddenly realize the homework is due tomorrow—except the homework is “don’t become irrelevant.”
“Banks and credit unions have finally recognized their biggest competitive threat in Big Fintech and Big Crypto,” says Lee Wetherington, Senior Director of Corporate Strategy at Jack Henry. “As we enter a new hybrid monetary era, the game is changing and charter franchises are under attack. The goal of strategy is no longer simply to win but to ensure you’re competing to win the right game.”
In other words: it’s not enough to be good at being a bank anymore. You need to be good at being a modern bank.
The Gen Z Gold Rush
Here’s where things get interesting. While banks are obsessing over deposit growth (64% list it as their top priority), credit unions are playing a different game entirely. Forty percent are focused on attracting Gen Z and Alpha generation customers—and they might be onto something.
Jennifer Geis, Senior Strategic Advisor of Corporate Strategy at Jack Henry, breaks it down: “Financial institutions are in a high-stakes race for Gen Z and small business. Given Gen Z now drives most small-business formation—and given small-business deposits are 4-5X larger than retail—understanding and meeting the unique needs of ‘bizumers’ is key to growth.”
Bizumers. It’s a portmanteau that somehow makes perfect sense. These are people who blur the line between business owner and consumer, and they’re worth serious money—literally four to five times more in deposits than regular retail customers.
Payments Are Having a Moment
Get this: 94% of CEOs plan to add new payment services within the next two years. That’s almost everyone. But here’s the plot twist—only 36% have actually created a formal payments strategy. That’s like deciding to run a marathon next month but not owning running shoes yet.
The standout stat? 82% of financial institutions plan to roll out tap-to-pay functionality as part of their strategy to attract younger customers. Because apparently, watching Gen Z look at you in horror when you don’t have contactless payment is finally motivating enough.
Nearly half of CEOs (47%) also plan to embed payment services directly into their digital banking platforms, which should have probably happened years ago but better late than never.
Small Business Gets Some Love
Three out of four CEOs say they’re expanding services for small and medium-sized businesses. The most popular additions on the menu? Payment services including FedNow, request-for-payment features, and—you guessed it—tap-to-pay.
It makes sense. Small businesses need modern payment tools, and whoever provides them gets to be the hero (and collect those sweet, sweet deposits).
Crypto Curiosity (But Not Commitment)
Here’s where things get a bit Wild West. Eighteen percent of CEOs plan to support stablecoins, tokenized money, or cryptocurrency by the end of 2027. We’re talking tokenized deposits, on-chain wallets for customers, and the ability to move seamlessly between dollars and crypto.
But—and this is a big but—only 3% have a formal stablecoin strategy in place. So basically, one in five institutions wants to dive into crypto, but almost none of them have a roadmap. What could possibly go wrong?
The Generation Gap Strategy
Adding younger accountholders ranks as the second most important priority for credit unions and fourth overall. It’s also one of the top three concerns keeping CEOs up at night, probably right after “Are we becoming obsolete?” and “What even is a stablecoin?”
Credit unions are ahead of the curve here—more than 40% have a formal strategy for attracting younger customers, compared to just 10% of banks. And who do they see as their biggest competition? Not each other. It’s fintechs and neobanks—the ones that Gen Z already trusts because they’ve never charged an overdraft fee or required a notary for anything.
Data Is the New Oil (We Know, We Know)
Leveraging data analytics ranks as the fifth most important strategic priority overall. Plans to implement AI jumped by double digits compared to last year, and about a third of financial institutions plan to embed data collection and analysis tools right into their digital banking platforms.
Because if you’re going to compete with tech companies, you need to start thinking like tech companies. And tech companies run on data like cars run on gasoline.
The Bottom Line
The survey—which drew from Jack Henry clients ranging from small community institutions under $500 million in assets to larger regional players over $5 billion—reveals an industry at an inflection point. The threats are real, the competition is fierce, and financial institutions are finally ready to spend what it takes to stay relevant.
Whether all these plans translate into actual transformation remains to be seen. But one thing’s clear: the days of coasting on charter protections and hoping fintech is just a fad are officially over. The game has changed, and banks and credit unions are finally changing with it.
Well, most of them anyway. That 12% not increasing tech spending? Good luck with that.