The Defining Characteristics of Retail Banking Digital Maturity

The 2025 update to Alkami’s Digital Sales & Service Maturity Model serves as both a mirror and a map, reflecting where institutions stand in their digital evolution and providing a clear path to growth and differentiation. The research, which surveyed financial institutions in the U.S., revealed four distinct cohorts of digital maturity among financial institutions — Patiently Exploring, Innovation-Ready, Digital-Forward and Data-First. 

Institutions that fall into the Patiently Exploring category remain anchored in traditional banking models and are focused on branch services. They believe in strong in-person, high-touch experiences. Their digital banking experiences often trail their competition, both for account holders and employees, due to low technology investments, and many lack the infrastructure to deliver foundational security features like 24/7 fraud response. 

Institutions that are considered Innovation-Ready have begun embracing digital and have a decent security posture and fraud protection. They are falling behind on investing in the employee experience and can thrive from bringing in more tools through integrations. While they are more tech aware than Patiently Exploring institutions, their internal fragmentation, resource constraints and underdeveloped marketing automation prevent them from realizing the full value of digital. 

Digital-Forward institutions set the standard for an innovative and secure digital banking experience. They’ve built integrated ecosystems and are operationalizing digital capabilities across both account holder and employee experiences. However, many still struggle to convert data into actionable insights to power personalized banking experiences and marketing automation.

Institutions that are Data-First are at the top of the curve. They treat digital not as a capability, but as a business model. They lead in deploying artificial intelligence, predictive marketing and intuitive employee platforms. These institutions pair internal upskilling with external talent acquisition to stay agile and competitive. Yet even these leaders face challenges — particularly in fraud prevention and security. This is where Digital-Forward institutions have made sizable strides ahead. Their future success will depend on harmonizing data and security to deliver a seamless user experience.

The Three Dimensions of the Most Digitally Mature Financial Institutions
1. Security and fraud. One of the most eye-opening findings is the paradox between data sophistication and fraud prevention. Digital-Forward institutions are the leaders in fraud protection — with 71% implementing destination account monitoring, 100% offering card freezing and blocking tools, and 90% providing real-time alerts. Data-First organizations take a unique approach, offering account holder incentives for fraud prevention and placing more responsibility on account holders.

2. Employee experience. While many institutions focus heavily on the account holder-facing side of digital banking, the research revealed the significant role of providing a superior and intuitive employee experience in the most mature cohorts. Digital-Forward and Data-First cohorts provide a significantly more intuitive administrative interface for their employees, with 38% and 53%, respectively, reporting their digital banking admin consoles are more intuitive than other technology in their stack. The most digitally advanced are also investing in upskilling and hiring future-ready talent, acting as force multipliers for their digital strategies.

3. Data, marketing automation and AI. The adoption of AI has become a powerful differentiator, but a successful deployment starts with building a solid data foundation. Forty-two percent of Data-First institutions have implemented generative AI in at least some areas of their organization. The performance gap becomes even more apparent in marketing, with 67% of Data-First institutions automatically pushing targeted marketing and 23% intercepting key digital moments with marketing actions.

What to Consider Moving Forward
1. Unifying security and experience. Break down the misconception that stronger fraud protection compromises user experience.

2. Elevating employee experience. Move beyond basic operational tools and invest in intuitive, integrated systems that empower employees, automate manual processes and improve efficiency.

3. Prioritizing talent strategy. Mature institutions upskill current staff and hire strategically.

4. Operationalizing data. The ability to convert insights into action is the new frontier and critical for leveraging AI responsibly.

5. Integrating AI thoughtfully. AI isn’t just a buzzword. For the most advanced institutions, it’s driving real-time personalization and creating revenue-generating opportunities.

Digital maturity is not about size, it’s about strategy. The research shows that one-third of the most mature institutions have under $500 million in assets, proving that smaller financial institutions can compete by investing in the right capabilities. For every financial institution, regardless of the level of digital maturity, the path forward requires intentional leadership, a unified strategy and a culture of continuous digital innovation.