2025 Banking & Finance Outlook: Bill Jones

Your bank opened its fifth branch in 2024. With the ongoing development of new technology options on phones and computers, how are banks balancing the push for digital transformation with the need for personal service, such as at branches?
It’s true that customers are migrating to newer and more convenient digital channels for routine banking transactions. In recent years, the industry and our own bank, in branch transaction counts, have been modestly declining. However, there is strong evidence to support the fact that certain customer demographics prefer to conduct their business in person. This is particularly true for community banks, which generally have well-established business models centered around relationship banking. Additionally, we hear from customers regularly who desire in-person meetings at the bank to address more complex transactions. An entrepreneur considering a new business venture or a young couple navigating their first home purchase are good examples. As community bankers, I believe we must remain relevant and competitive by having effective digital and mobile product and service solutions. However, I don’t believe there is any substitute for meeting a new customer in our bank lobby and extending a warm personal greeting and handshake.

As the Federal Reserve made several interest rate cuts in 2024, how is that impacting the banking and finance industry?
As of (December), the Federal Reserve announced another 25-basis points rate cut, reducing the federal funds rate by 100-basis points for the year and currently a range of 4.25%-4.5%.
The most notable impact has been the repricing of deposits to modestly lower levels. Most banks fund their balance sheets primarily with local deposits. Securing those deposits has been ultra-competitive for most of 2024. Lowering rates provide some relief for banks in terms of the cost, which generally provides for improving margins. Banks have to be creative and intentional about gathering and retaining stable funding, such as deposits, as the interest rate environment changes. The Federal Reserve’s updated economic projections now signal an additional 50-basis points of easing in 2025.
As shorter-term rates continue to fall and longer-term rates, like the 10-year Treasury, remain higher, a more traditional upward sloping yield curve is the result. This interest rate environment is conducive to favorable operating conditions for banks.

What does the current competition for talent look like for the industry?
Banking, as an industry, hasn’t done a great job making itself appealing to current and future job seekers. The perception is that the industry is not exciting and with limited opportunity. In reality, it is quite the opposite. Particularly, community banks play such a vital role in their respective communities – not only helping the community prosper economically but also giving and serving in tangible ways. I believe companies who are strategic in their recruiting plans, have clear and purposeful cultures and provide clear education and advancement opportunities will do well in terms of securing and retaining talent.