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Projected Growth for Banks and Credit Unions in 2025

As we enter the year 2025, recent research by Wipfli, a prominent advisory and accounting firm, reveals an optimistic outlook for banks and credit unions. Despite facing several persistent challenges, leaders within the financial services sector express confidence in their growth prospects driven by stabilizing interest rates and increasing asset growth expectations.

Insights from Wipfli's Research

On January 2, 2025, Wipfli made public two critical industry surveys highlighting the current challenges and future growth strategies for banks and credit unions. This extensive research indicates a significant turnaround in optimism from last year, with a noticeable increase in confidence among financial institution leaders regarding their growth trajectories.

Anna Kooi, the head of Wipfli's financial services practice, emphasized that while the industry stands at a pivotal point of digital transformation and embracing artificial intelligence (AI), it must also navigate challenges such as heightened cybersecurity threats and ongoing talent shortages. As financial institutions prioritize their strategic goals, leveraging data and technology will be integral to driving growth.

Economic Climate and Growth Expectations

This year's survey findings show a remarkable shift in outlook, with 58% of banks anticipating at least a 5% increase in their assets. This marks a dramatic rise from the 36% who expected similar growth last year. Such optimistic projections reflect the sector's response to improved economic conditions and adjustments made amidst previous uncertainties.

Additionally, the competition for clients—especially among younger generations like Gen Z—is prompting banks to diversify their services. Efforts to attract new customers and retain existing ones are driving innovation within traditional banking channels, with many institutions focusing on developing offerings in Banking-as-a-Service and embedded banking.

Importance of Cybersecurity and Digital Transformation

Cybersecurity remains a top priority, with financial leaders pushing for increased investments in protective measures. The rise in cyber incidents has compelled over half of surveyed credit unions to enhance their cybersecurity posture. In 2024 alone, 49% reported an increase in fraud cases, with a striking 76% indicating unauthorized access attempts to their data or networks.

Despite the critical nature of these investments, the research pointed out that only half of the credit unions surveyed felt they had achieved digital maturity in their customer experience initiatives. The hurdles they face include seamlessly integrating new digital solutions with existing systems and addressing data privacy concerns.

Credit unions are now on the offensive as they strive to win and retain members amidst a competitive landscape. Tailoring their offerings to meet evolving customer expectations is crucial for their survival and growth. Prioritizing digital engagement and refining customer experiences will help them differentiate themselves in a crowded industry.

The Path Forward

Looking ahead, the banking and credit union sectors are tasked with harnessing technological solutions to enhance their operational frameworks while ensuring they maintain robust security measures. As Kooi highlights, the pivotal strategies for growth encompass an intentional integration of data tools and scalable technology. All signs point toward a year where investment in tech infrastructure will be key to overcoming barriers, managing bank economics, and capturing market share in 2025.

Overall, Wipfli's research underscores a complex yet promising landscape for banks and credit unions in 2025. With a mix of caution and optimism, financial leaders are equipped with the insights necessary to navigate challenges and seize growth opportunities in the coming year.