Reality Check: Can AI and Open Banking Really Drive Engagement and Growth?
Today's dynamic financial landscape underscores the importance of fostering strong relationships and empowering financial well-being for accountholders. AI stands out as a pivotal force, reshaping how you can connect with and support people in the communities you serve.
By Jennifer Geis, Senior Strategic Advisor, Research and Payments at Jack Henry
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Banks and credit unions are rapidly embracing AI’s potential, with the Jack Henry™ 2025 Strategy Benchmark study showing a growing number of banks (24%) reporting AI investments achieving double-digit year-over-year growth. With credit unions historically prioritizing AI investments, this widespread adoption signals a fundamental shift in how financial institutions are approaching their future strategies.
This isn’t merely about keeping pace with technological trends.
Instead, it’s fueled by the profound ability of AI to enhance operational efficiency, personalize experiences, and ultimately strengthen the relationships between you and your accountholders.
Want more insights like these? Check out Jack Henry’s content hub: Maximize the Impact of AI to Ignite Innovation
The Foundation of AI: Data is King
Unleashing the power of AI requires robust and comprehensive data.
Whether your goal is to improve digital account opening for Gen Z, offer innovative payment methods, streamline small business loan underwriting, or combat fraud and cyber threats in real-time, access to comprehensive data is non-negotiable. However, the fragmented nature of consumers’ financial lives presents a significant challenge, with the average U.S. adult maintaining relationships with 15 to 20 financial service providers and apps.
As a result, most financial institutions estimate they have access to only about 25% of their accountholders’ total financial data, at best. Without a more comprehensive view of your accountholders’ financial lives, it becomes difficult to truly understand their individual needs or offer the most relevant products and services.
Open Banking to the Rescue
This is where open banking emerges as a critical enabler for AI initiatives.
Leveraging open banking can enable you to overcome data silos and centralize information from various sources, paving the way for hyper-personalized experiences and targeted marketing.
As trusted providers, you have a unique opportunity to secure higher consent rates for data sharing compared to less established fintechs, positioning yourself as the central financial hub for your accountholders.
Enhancing Operations and Lending with AI
AI offers you the potential for significant gains in operational efficiency.
In fact, 30% of financial institutions surveyed in the Strategy Benchmark plan to make AI a top five investment within the next one to three years. Furthermore, both banks and credit unions are looking to refine existing tools and strategically allocate IT budgets, with AI-enabled solutions playing a crucial role in achieving more value with each investment dollar.
This focus on efficiency is especially evident in lending, with 90% of financial institutions planning to enhance their capabilities.
While banks prioritize automated workflows, automated financial spreading, and portfolio credit monitoring, credit unions are focused on underwriting using AI, rules/decision engines, and automated funding. Despite these differing focuses, the underlying goal remains the same: to streamline processes and improve operational efficiency in lending.
As lending volumes for 2025 without an interest rate cut in the near future, banks and credit unions need to prime for the future, in which case a robust and AI-powered loan origination system becomes essential. The advantage lies in providing a seamless digital experience throughout the entire loan lifecycle. Leveraging open finance for real-time insights, employing data-driven strategies to enhance decision-making, and using AI to improve underwriting decisions are key to gaining a competitive edge.
This means you can drive scalability, speed, and operational efficiency while empowering your lenders to focus on portfolio growth and risk management.
Build Deeper Relationships Through AI-Powered Personalization
Beyond operational gains, AI holds the key to unlocking deeper and more meaningful relationships with your accountholders.
In today’s crowded market, basic or impersonal services risk losing users to more sophisticated alternatives. Consumers and businesses have rising expectations for digital platforms that prioritize addressing their financial needs first — offering tailored products and solutions second. Relationship-based banking enhanced by open banking and embedded finance is the future of building trust, brand loyalty, and ongoing engagement.
AI plays a crucial role in this shift by enabling the delivery of hyper-personalized experiences.
According to the Jack Henry Strategy Benchmark, 31% of both banks and credit unions report plans to embed data collection/analysis tools within their digital banking experience within the next two years. By leveraging the collection, orchestration, and analysis of proprietary data (such as goals, spending habits, and app interactions), you can gain a deeper understanding of your accountholders’ needs and address pain points in their digital journey — empowering you with essential insights to differentiate your offerings in an oversaturated market.
The Path Forward: Embracing AI Strategically
Enabling the transformation of your digital banking platform with AI requires a top-down approach. Your entire financial institution must focus on relationship building, digital experience, and delivering the right products at the right time.
The ultimate goal is to address financial fragmentation and reestablish yourself as the central hub in the financial lives of your accountholders.
To effectively leverage AI, you must first develop a clear, forward-looking data strategy for the next three to five years that identifies key growth objectives, efficiency gains, and AI use cases. Then, you must ask yourself critical questions about data availability, accessibility, and infrastructure. Do you have the right data? Is it accessible, clean, and actionable? A well-defined data strategy is more than just a roadmap. It’s a foundational investment that positions you for future success.
In this evolving landscape, trying to be everything to everyone is no longer a viable strategy.
Instead, you should set realistic benchmarks by clearly outlining your target market and identifying successful players in the same niche. Furthermore, embracing fintech partnerships and embedded finance can help bridge any gaps in competitive functionalities, speeding up time to market and leveraging specialized expertise.
Download the 2025 Strategy Benchmark to unlock the power of data, refine your strategy, and compete effectively.
