Bank Director’s 2023 Technology Survey Results: Addressing The Digital Landscape

NASHVILLE, TENN., Sept. 19, 2023 – Bank Director, the leading information resource for directors and officers of financial institutions nationwide, released the results of its 2023 Technology Survey, sponsored by the technology services provider Jack Henry. The findings reveal that many bank leaders are reevaluating their strategic priorities in an increasingly digital landscape, but they may be missing an opportunity to better serve small businesses.

Over 80% of survey respondents say their bank offers small business clients digital capabilities including mobile deposits (93%) and payments (84%), but less than half of those respondents offer digital deposit account opening, digital loan applications, accounts payable/receivable and other valuable services.

Banks that fail to provide small businesses with additional digital offerings could risk losing those customers to fintech competitors.

“We’ve long seen nonbank competitors – companies like Block, through its Square platform, and even Amazon.com – nibbling away at the small business space,” says Emily McCormick, vice president of editorial & research at Bank Director. “Understanding how to effectively serve that customer, both in person and via technology, could be critical to stopping that attrition.”

The threat isn’t limited to small businesses, either. According to the survey, bank leaders also expressed rising concerns about the threat of digital neobanks such as Chime that have demonstrated success in growing deposits from a younger client base.

Although more than half of respondents still point to traditional competitors – small, local financial institutions and big/superregional banks – as their top threats, 42% say they’re concerned about neobanks that attract consumer deposits.

Banks are spending more in response to competitive threats and operational challenges. Most respondents say their banks’ technology budgets grew over the prior year, and a median 15% of those budgets are devoted to new initiatives. Bank leaders name digital business account opening, payments capabilities and digital business lending as their top three planned investments.

“In today’s environment, we have found that no matter what a financial institution is trying to solve for, technology is almost always the solution,” says David Foss, board chair and CEO at Jack Henry. “Technology is critical for financial institutions to compete successfully, differentiate strategically and meet the evolving needs of their customers.”

Key Findings

The Rising Neobank Threat
Sixty-one percent of respondents identify local banks or credit unions as their bank’s primary competitive threat, followed by big/superregional banks (56%) and neobanks that compete for consumer deposits (42%), such as Chime – a significant increase compared to last year’s survey.

Emphasizing Digital
This year, 44% of respondents say that digital channels are more critical to their bank’s strategy, compared with 33% who said the same last year. The percentage who rank digital channels and the branch as equally important also dropped, from 57% to 48%.

More Dollars For Tech
A large majority (83%) of survey respondents say their bank’s technology budget increased over the past year, at a median increase of 10%.

Emerging Opportunities
More than half (56%) say their boards have discussed allocating budgets or resources to artificial intelligence, while 47% say the same about banking as a service. Smaller percentages have had similar discussions about blockchain (15%) or cryptocurrency and digital assets (24%).

Barriers To Adoption
Almost three-quarters cite integrating with the bank’s core as a chief obstacle to planned upgrades or implementations, followed by acceptance by bank staff (53%) and customer adoption (51%).

Seeking Board Expertise
Fifty-one percent say their board has at least one member they would consider to be a technology expert, and 38% of those who don’t say they are actively seeking a director with technology expertise.

The survey includes the views of 102 independent directors, chief executives, chief operating officers and senior technology executives of U.S. banks below $100 billion in assets. Full survey results are now available online at BankDirector.com.

About Bank Director
Bank Director reaches the leaders of the institutions that comprise America’s banking industry. Since 1991, Bank Director has provided board-level research, peer-insights and in-depth executive and board services. Built for banks, Bank Director extends into and beyond the boardroom by providing timely and relevant information through Bank Director magazine, board training services and the financial industry’s premier event, Acquire or Be Acquired. For more information, please visit BankDirector.com.

About Jack Henry & Associates, Inc.u00ae
Jack Henryu2122 (Nasdaq: JKHY) is a well-rounded financial technology company that strengthens connections between financial institutions and the people and businesses they serve. We are an S&P 500 company that prioritizes openness, collaboration, and user centricity – offering banks and credit unions a vibrant ecosystem of internally developed modern capabilities as well as the ability to integrate with leading fintechs. For more than 47 years, Jack Henry has provided technology solutions to enable clients to innovate faster, strategically differentiate, and successfully compete while serving the evolving needs of their accountholders. We empower approximately 7,500 clients with people-inspired innovation, personal service, and insight-driven solutions that help reduce the barriers to financial health. Additional information is available at www.jackhenry.com.

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For more information, please contact Bank Director’s Director of Marketing, Deahna Welcher, at [email protected].