iStock photo

Bank CEOs are prioritizing growing deposits and loans, talent and increasing efficiency in the face of net interest margin compression, while credit union CEOs are sweating the possibility of a recession and becoming more data-savvy according to a new survey from core provider Jack Henry.

The company released the results of a survey last week that sampled 118 bank and credit union CEOs from its core customer base during the first quarter. It’s Jack Henry’s fifth annual such survey. The survey asked executives to identify their top three strategic priorities and top three concerns among a battery of 11 concerns and a free response field, and 12 priorities and a free response section.

Fifty-two percent of bank CEOs said growing deposits was one of their top three strategic priorities for the next year or two, while 50 percent said growing loans was, and 45 percent named “increasing operational efficiency.” Their biggest concerns were talent acquisition and retention (57 percent), net interest margin compression (57 percent) and a two-way tie between deposit attrition and regulatory changes, with 43 percent of executives naming each as a top concern.

Among credit union CEOs, the largest share (42 percent) said they were prioritizing “leveraging data for strategic insights,” followed by just over a third identifying “growing deposits,” “growing loans,” increasing efficiency and adding more account-holders. The top three concerns were: a recession (53 percent), deposit attrition (44 percent) and a two-way tie between regulatory changes and talent acquisition or retention (34 percent).

“For 2023, the top priority is technology that improves deposit retention and acquisition,” Jennifer Geis, senior strategy analyst at Jack Henry, said in a statement accompanying the report. “That means options for automated savings and investments, the ability to receive real-time payments when FedNow launches, and shoring up deposit gaps among Gen Y and Gen Z with early-paycheck access and mobile-only account opening that doesn’t require funding upfront.”

In addition, Jack Henry reported, 79 percent of the CEOs surveyed plan to increase their technology spend over the next two years, with a focus on digital banking, fraud and security and data analytics; 90 percent also plan to embed fintech into their digital banking experiences, with 65 percent planning to embed payments fintechs.

“While improving digital products and services has been the focus over the past few years, the flux of both 2022 and 2023 has shifted focus down stack to modernize tech infrastructure in service of strategic agility and the real-time data analytics necessary to fight fraud, improve UX, and establish intra-day visibility into balance-sheet KPIs, including and especially deposit inflows and outflows,” Lee Wetherington, senior director of corporate strategy at Jack Henry, said in a statement. “Financial institutions who proactively take advantage of market shifts are better positioned to capture upside potential and mitigate downside risk – no matter how the economy unfolds in 2023.”