The Intersection of Financial Institutions and Technology Leaders

6 Ways to Future-Proof Your Community Bank

By Wade Barnes

Transformative chief information officers (CIOs) steer their institutions through challenging times by aligning innovation with customer-centricity. Since the banking industry has arguably changed more in the last five years than in the previous two decades, it is no longer enough to just keep banks buoyant. Successful CIOs need to drive transformational change and ensure technology is creating business value. Here’s a closer look at the six key areas where community bank CIOs should focus on optimizing business outcomes and impact.

1. Growing Deposits and Customer Base
Core deposit growth remains a primary concern with issues like capital constraints and a small geographic base obstructing deposit growth. Digital branches can generate far higher deposit outgrowth compared to physical branches since they’re more cost efficient.

When it comes to bank expansion, digital branches are also far cheaper than their physical counterparts as they operate at a fixed cost. Community banks can launch in one state and gradually expand nationwide, with little additional expenses. Automated processes minimize human discrepancies, enabling banks to onboard new customers swiftly and cost-effectively.

2. Digital Banking Transformation
One success metric of digital banking for community banks is to contrast them with their primary competitors: commercial banks. In a 2022 analysis from S&P Global Market Intelligence, 10 of 15 U.S. partner banks experienced a doubling of their total deposits, overshadowing similar-sized U.S. banks.

Likewise, more than 300 community banks countered challenges like seamless online banking platforms and user-friendly mobile apps because of their potential to streamline daily banking operations and help deliver quick solutions to keep people first.

3. Enhancing Customer Experience
A McKinsey & Co. report found that customers who are “highly satisfied” with their bank’s services are 2.5 times more likely to open new accounts with that bank than those who are merely satisfied. With the right digital tools and relationships, CIOs can revamp their banking with quick accessibility, convenient onboarding and superior user experience. Insights gleaned from data and artificial intelligence tools like chatbots can expedite service response times and elevate overall quality.

4.Regulatory Compliance and Security 

Modern CIOs face two primary challenges:

• Cybersecurity risks encompass three aspects: Escalating advanced threats, vulnerable IT environments and limited resources for mitigation. These risks ultimately erode the bank’s ability to protect customer data.

• Increased regulatory challenges such as the European Union’s General Data Protection Regulation, the Payment Card Industry’s data security standards and the ISO 27001 data protection governance. CIOs today need to study the evolving security landscape while maintaining routine operations. Negligence can lead to legal action, financial penalties and reputational damage.

5. Core Banking Modernization
Digital transformations can be disruptive and costly, especially when using rigid traditional symptoms to integrate new technology. Banks can maneuver around these challenges by choosing solutions that let them run the bank instead of changing the bank.

Adopting a cutting-edge, digital omnichannel approach that aligns with client needs can make community banks more nimble and adaptable, offering services around the clock. Upgrading core banking systems provides CIOs with the tools to expand their community reach and serve a more diverse clientele.

6. Resource Management and Budget Constraints
To optimize business outcomes, CIOs need to strategically manage technology investments. For many executives, that means prioritizing innovations in security, payments or digital loan applications.

Bank Director’s 2022 Technology Survey revealed that 89% of bank senior executives chose cybersecurity as their key area for investment, while 62% of respondents prioritized security and fraud concerns. An additional 63% of executives implemented or upgraded their payments capabilities, while 54% focused on enhancing digital retail account openings. Few respondents reported having data scientists on staff to leverage their bank’s data.

Wade Barnes is the financial services industry lead at Hartman Executive Advisors. Learn more here: