In 2025, bankers prioritize operational efficiency and tech integration to boost bottom line

A version of this article first appeared in the December BAI Executive Report: The 2025 banking landscape. Within, industry peers share the strategies and potential solutions for meeting customer needs, preparing for market uncertainty and streamlining operations to preserve margins.

For the first time, operational efficiency was identified by bankers as one of their top 3 business challenges for the year ahead, according the ProSight Banking Outlook: 2025 Trends.

That’s not surprising in light of the need for financial services organizations to do more with less in a still high-interest, tight-margin environment. Operational efficiency claimed the No. 3 position behind growing deposits and acquiring new customers in ProSight’s most recent survey of about 150 financial services leaders.

The need to more efficiently control operational costs is also reflected in bankers’ top investment priority for 2025: technology integration and platforms. Technology, of course, can streamline a bank’s ability to operate and meet customers’ needs while improving the balance sheet.

Technology integration and platforms was followed by customer digital experience and fraud mitigation – identical to the top investment priorities of the previous year.

Costs and opportunities as branch roles persist

Further streamlining branch operations with technology, however, may have its limits – at least for now. Customers continue to rely on human-powered branches with their substantial overhead costs for such high-value activities such as getting advice on a complex product, applying for a loan and opening or closing an account.

More routine transactions like making a deposit or transferring funds are increasingly moving to the tech-driven mobile and online channels.

When bankers were asked which modifications they have made to their branches, the leading response was “staff changes.” Those changes have largely been a reduction in branch staff.  The second most popular response was video signage in the lobby followed by access to wi-fi for customers.

In fact, customers remain fond of the high-quality personal service they receive in the branch, according to the ProSight Banking Outlook. More than four in 10 (44%) customers surveyed described their in-person branch experience as excellent. The survey queried roughly 1,000 respondents.

In sharp contrast, only 11% of customers described their digital experience as excellent. In other words, banks and credit unions have miles to go before they close the gap between the quality of their in-person customer experiences versus their digital customer experiences. Realizing operational efficiencies through further investments in technology and platforms will remain a challenge in the meantime.

Further complicating that challenge, customers want 24/7 customer service when using their bank’s app or other digital capabilities. However, most bankers say 24/7 customer service is not practical from a cost-containment perspective.

Cost-effective and on-demand customer service

Relying on more AI applications to provide or improve 24/7 customer service is a possible solution. Customers, particularly younger generations, appear amenable to letting AI improve their digital experience.

According to the ProSight Banking Outlook’s consumer survey, 59% of Gen Z and 55% of Millennials said they are comfortable receiving financial assistance via AI. Half of Gen X customers and 40% of Boomer+ customers said they too are comfortable with AI for financial assistance.

When financial services organizations were asked about their plans for AI, 30% said they were already using AI, another 33% said they plan to use AI in the next year. About a quarter (24%) said they have no plans to use AI.

Mitigating fraud risk is the leading use of AI for financial services organizations that have already adopted the technology. The second-leading AI application was for marketing or prospecting, which tied with internal use in models.

The risk of becoming a victim of fraud is the No. 1 frustration about the digital customer experience of Millennials, Gen X and Boomer+ customers. The No. 1 customer digital concern for Gen Z customers was the lack of personalized financial recommendations. Gen Z consumers are new to banking and hungry for reliable financial advice.

Fear of becoming a fraud victim was Gen Z’s second-leading frustration, while the second leading concern about the digital experience for Millennials, Gen X and Boomers+ was “that technology changes too much.” Rapidly changing technology can be a twin-edged sword for consumers and bankers alike.

Regardless of customers’ frustrations with their digital banking experiences, their use of a smartphone to do everything from checking account balances to transferring funds to making peer-to-peer payments grew from 2023 to 2024, according to the survey.

A growing percentage of younger consumers opened an account online. In 2023, 18% of Gen Z opened a deposit account online; in 2024, the percentage rose to 26. For Millennials, the percentage rose from 16 to 21. However, online account openings fell for Gen X (from 14% to 9%) and for Boomers+ (from 6% to 4%).

The cost of lost customers

And while operational belt-tightening prevails for now, strategic thinking can’t be shelved for too long. A positive digital customer experience is absolutely essential – even more so as the banking landscape grows more competitive. Six in 10 Gen Z (59%) and Millennial (61%) consumers said they would switch financial services organizations for one offering a better mobile app and superior digital capabilities.

The same is true for Gen X (40%) and Boomer+ (16%) consumers. The percentages of those willing to switch banks for such offerings rose for all generations from the 2023 survey to the 2024 survey, underscoring the importance of leading-edge mobile and digital capabilities.

Smart adoption of technology will not only help financial services organizations meet the growing digital appetites of their customers and attract new ones, but it can streamline operations across the board, allowing those efficiencies to fall to the bottom line.

Mark Riddle is Director, Research at BAI.