According to one recent study, global technology spending in the banking industry has been increasing 9% per year, every year, for the last few years.
To put that into perspective, this is actually outpacing an average revenue growth of 4%.
In 2023 alone, that spending totaled about $650 billion.
As is true with many other sectors, the banking industry is in the process of a significant transformation that is driven in large part by these technological advancements.
This level of spending is all about the long game.
Those savvy professionals who can see where things are headed know that if they don't act today, they will quickly find themselves left behind.
This is true even of credit unions and smaller community banks.
They can't wait for "the experience of tomorrow" to arrive, at which point they will try to adapt to it.
By then, it will be too late.
They need to start putting the foundation in place today to be ready for that time when it arrives.
This is true even if that proactive nature comes at great expense right now.
Over the last several years, it's those smaller organizations that have had to contend with ever-changing customer expectations, regulatory pressures, and the growing need to become leaner, faster, and more efficient organizations.
Think about it from the point of view of a credit union.
If you're naturally small and locally focused, you'll never be able to outspend your larger competitors.
National (and especially international) banks have money to spare and they're operating in the same areas you are.
At that point, your competitive advantage becomes the core experience that you're able to offer to consumers - something they won't be able to find anywhere else.
How do you reinforce that core experience and make it as strong as it can possibly be?
Through the smart, strategic adoption of cutting-edge IT solutions.
Indeed, the future of IT in banking is an important one to follow because it's the key to becoming and staying as competitive as you can.
There are a number of banking IT trends in particular for 2025 that are poised to reshape the landscape.
The organizations that acknowledge this will be better prepared to leverage these innovations moving forward.
At this point, it's no secret that the banking industry (along with just about every sector you can think of) is embracing artificial intelligence and machine learning more each day.
But what's really fascinating is how those smaller institutions out there are taking advantage of something that simply wasn't an option even as recently as a decade ago.
Take customer experience enhancements, for example. AI-driven chatbots, virtual assistants, and recommendation systems are transforming how banks interact with customers.
Personalized services such as targeted offers, fraud detection, and real-time customer support are all powered by machine learning algorithms that can analyze vast amounts of data in real time.
AI is automating routine banking tasks like compliance monitoring, credit scoring, and risk management.
This reduces human error, speeds up decision-making, and improves overall efficiency.
Machine learning models enable banks to predict market trends, customer behavior, and loan defaults with high accuracy, allowing for more informed business decisions and improved risk management.
Blockchain technology is another example of a trend that is largely changing how the banking industry functions from the top down.
Because the Blockchain is decentralized and immutable by design, it offers a much greater level of security and transparency for every transaction than what was previously available.
This technology has the potential to reduce fraud, lower transaction costs, and increase efficiency in processes like cross-border payments, trade finance, and identity verification.
Smart contracts are a great example of this.
They're self-executing contacts that can help streamline agreements and make things run far more efficiently and securely.
Central Bank Digital Currencies, otherwise known as CBDCs for short, can also potentially change the way money is not just issued, but transferred and even managed by central banks as well.
Of course, whenever an industry begins such a seismic shift like this one, there is always uncertainty that comes with it.
That's why there has also been an increased focus on cybersecurity and data protection, too.
Rising threats, ever-changing regulatory compliance requirements, and more have led to the adoption of advanced security measures across the board.
Multifactor authentication or MFA is a prominent example of this, which requires two forms of authentication to access certain critical systems that may contain sensitive customer information.
The need for a digital-first approach has also led to a major shift towards digital transformation and cloud services as well.
Many banks are shifting their infrastructure to the cloud for scalability, cost efficiency, and flexibility.
Cloud platforms allow financial institutions to quickly deploy new services, innovate more rapidly, and access advanced analytics tools.
The technologies at the heart of a lot of these trends are inherently sophisticated.
If you're a small credit union serving a particular area, you can't expect to just integrate AI into your day-to-day operations with the ease of flipping a light switch.
You need to be proactive, but realistic, about planning for the future.
That process always begins by identifying which trends are the most relevant to not only your business as it exists today, but the organization you hope to be running in five years, too.
Evaluate current business processes, customer demands, and market conditions to determine which emerging technologies will provide the most value.
For example, AI and ML may be highly beneficial for banks focused on customer service and fraud prevention, while blockchain might be more relevant for institutions looking to improve transaction efficiency.
This will also require you to be thoughtful about how those new technologies are adopted.
Pilot programs and testing, at a minimum, should happen BEFORE anything new is implemented.
You should use a small group to assess the feasibility of something and to understand the impact it will have, especially in terms of cost-effectiveness.
In the event that you do decide to pull the trigger on a solution, you need to work on continuous training to get the most from your investment.
Not only will continuing training and ongoing education help you get maximum adoption from your workers, but it will also help make sure they're using that tool as effectively as possible as well.
But while innovation like this is obviously critical, never forget that especially in an industry that is as heavily regulated as banking, security, and compliance need to remain top priorities.
Implementing technologies like AI, blockchain, and cloud services requires careful planning to ensure that data privacy and security are not compromised.
Regular audits and compliance checks are essential for staying on top of emerging risks.
Thankfully, many of these banking IT trends already have clear use cases that prove their effectiveness when deployed properly.
Integrated AI-powered systems can be a perfect way to monitor transactions in real-time, for example, detecting fraudulent activity much faster than humans ever could on their own.
At the very least, when conditions do deviate from the accepted definition of "normal," the right employees can be notified immediately so that they can do something about it.
The lesson to be learned from situations like this is that innovation needs to be tailored.
Not all tech trends are created equally and not all of them will make sense for your organization given what it is trying to accomplish, either.
Always focus on the customer impact and make sure you understand what improvements something will bring to the table.
Be sure to always monitor that deployment moving forward and adapt to new information as it comes in.
A managed services provider, otherwise called an MSP for short, can be an invaluable tool to that end.
When you enlist an MSP with something like co-managed IT services, you're getting a team of people who are coming into and supporting your in-house IT people.
You may not have enough cybersecurity experts on-hand to deploy something like AI, but an MSP does.
You may not have the expertise needed for a full-scale transition into the cloud, but an MSP does.
This can be a great way for financial institutions to adopt new solutions without overburdening internal teams.
Additionally, MSPs can assist with ongoing monitoring, compliance, and risk management, ensuring that banks stay ahead of the curve.
One of the most important things to understand about all this is that life moves fast and, somehow, technology seems to move even faster than that.
As we look forward to 2025, the banking industry will continue to be shaped by rapid technological advancements like the increased adoption of AI, machine learning, and the Blockchain.
But as 2025 arrives and marches on, it's difficult to say what new trends will make waves and to what degree.
Enhanced cybersecurity measures evolve quickly, for example, because financial institutions need to stay one step ahead of hackers and rogue actors that wish to do them harm.
There will be an increasing shift towards cloud-based solutions that will create a degree of innovation that we might not be able to adequately predict right now.
To remain as competitive as possible, credit unions and smaller community banks need to not only adopt these technologies as they arrive, but balance innovation with security and regulatory compliance, as well.
Those organizations that are the most successful will be those that implement these trends as they make sense for their long-term goals.
These are the institutions that will be able to meet the needs of the modern consumer, stating head of the competition as well.
Partnering with an MSP can be a great way to do this, as it helps to navigate the evolving IT landscape with insight and expertise that you might not have access to on your own.
It's a move that also helps to make sure that technology adoption is as seamless, as secure, and as future-proof as possible.
Those financial institutions that begin preparing today will be stronger tomorrow because of it.
They'll be able to capitalize on not just these merging trends, but the ones that are on the horizon that many can't even predict right now.
They'll be the community banks and credit unions that thrive in an increasingly digital world - regardless of the shape that takes.
If you're interested in finding out more information about the future of IT in banking and how that might impact your own organization, or if you have any additional questions about banking IT trends to watch for 2025 that you'd like to go over with someone in a bit more detail, please don't hesitate to reach out to us today.