CHICAGO, March 07, 2025 (GLOBE NEWSWIRE) — Financial institutions nationwide are preparing to navigate significant economic uncertainties and mounting competition from non-traditional, digitally based competitors and industry consolidation throughout 2025, according to a new report from Strata Decision Technology.
The 2025 CFO Outlook for Financial Institutions report combines industry analysts’ projections with Strata’s independent research. The impacts of interest rate changes and other economic factors — such as tariffs on imports from countries such as China, Canada, and Mexico — remain unknown. At the same time, analysts predict financial institutions could benefit from regulatory changes and the expansion of new technologies.
“Financial institution leaders face considerable challenges as they work to bolster stability for their institutions in 2025,” said Eric Wheeler, Senior Director for Product Management at Strata. “Yet analysts are cautiously optimistic and predict that the momentum of 2024 will continue this year. Leaders will need to prepare for a variety of potential outcomes as they navigate shifting market forces, rising competition, and an unclear economic environment.”
Finance leaders cited shifting interest rates as both the No. 1 risk and the primary driver of business model change in 2025. The Federal Reserve has indicated it will lower interest rates in 2025, but not to the extent originally projected and dependent on how the broader economy performs.
With the Trump administration’s promises to scale back Biden-era regulations, financial institutions anticipate potential easing of capital requirements and further incentives for digital innovation. At the same time, however, the Trump administration is also easing restrictions on fintechs and cryptocurrency providers, which could lead to heightened competition from non-traditional financial services companies.
The continued rise of digital-only, alternative finance providers such as neobanks and buy-now pay-later platforms remains a serious concern for industry leaders. In response, leaders cited their top three areas for technology spend in 2025 as digital banking, data and analytics, and fraud prevention and security.
Analysts predict the industry will see an increase in the number of mergers and acquisitions in 2025, as asset quality improvements that began in late 2024 continue. Banks, credit unions, and other financial institutions are expected to continue to consolidate as they seek to build scale and keep pace with technological advancements. Some analysts anticipate the increased M&A activity will include a rise in non-traditional mergers among credit unions and banks, and banks and fintech companies.
Artificial intelligence (AI) was identified as the top factor that will have the biggest impact on the future of financial services. Business applications of AI remain relatively low across all industries — including financial institutions — but that is expected to rapidly change in the coming years. Strata customers have said their institutions are applying AI primarily for customer service, such as the use of chatbots to communicate with customers. Many institutions plan to expand AI use over the next 12-18 months in areas such as financial systems, planning, fraud prevention, and further personalizing the customer experience.
To address interest rate uncertainties, institutions are implementing numerous strategies, including increasing their focus on non-interest income, decreasing expenses, and changing product pricing. Financial institution leaders noted that commercial loans are projected to be their top area of profitability growth in 2025. Other anticipated growth areas include mortgage loans, consumer loans, deposits, and small business loans.
About Strata Decision Technology
Strata Decision Technology, LLC provides a cloud-based, enterprise performance platform for software, and data and service solutions to help organizations better analyze, plan, and perform in support of their missions. More than 2,300 organizations rely on Strata’s StrataJazz and Axiom solutions for financial analytics, planning, and performance management. Named the market leader for Business Decision Support for more than 15 consecutive years, Strata delivers first-class solutions and service, with an intense focus on accelerating innovation. For more information, please go to www.stratadecision.com.
Media contact:
Sally Brown, Inkhouse
strata@inkhouse.com
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