Reimagining Resilience: How CFIs Are Adapting for 2025

In 1776, Alexander Hamilton was an ambitious young immigrant whose financial genius helped lay the foundation for the US banking system. In 1784, he also co-founded BNY, one of the oldest banks in the world. Yet, Hamilton’s story remained largely in the shadows until centuries later, when it was given a modern-day makeover through “Hamilton,” the Broadway smash hit. According to BNY’s 2024 Voice of Community Banks Survey, community banks are currently undergoing their own “modern makeover.” Driven by rising customer expectations and stiff competition, community banks are prioritizing digital transformation and external partnerships to strengthen their role in an evolving financial ecosystem.Focused on Digital TransformationDigital transformation is a top priority for community banks, with over 90% of respondents prepared to accelerate their efforts. However, many challenges remain. For example, over 50% believe their data analytics capabilities are “advanced,” yet fewer than 20% consider themselves experts.Key areas of focus for community banks in 2025 include:

Other technologies, such as e-signatures, mobile wallets, and biometric identification, are also gaining traction. Nearly one in three community banks considers these tools critical to remaining competitive.

Source: BNY’s 2024 Voice of Community Banks SurveyStrategic Partnerships Are KeyAccording to FDIC data, community banks are the backbone of local economies, servicing over 35% of small business loans, 30% of commercial real estate loans, and 70% of agricultural loans. To maintain their key role in communities, community banks must evolve alongside client expectations and competitive pressures.The survey shows that beyond tech innovations, more community banks are turning to external partnerships to expand their capabilities and deliver cutting-edge solutions without overstretching internal resources. Among those surveyed:

These collaborations allow CFIs to deliver sophisticated tools while preserving their community-driven focus. Fintech partnerships offer scalable digital solutions, while non-fintech collaborations help deepen local engagement and customer outreach.

Source: BNY’s 2024 Voice of Community Banks Survey Meeting Rising Customer DemandsAs customer expectations continue to rise, 40% of survey respondents indicate that they’re struggling to offer competitive loan rates. More than 35% want to offer high-yield savings or advanced investment options to better serve customers.Meanwhile, community banks also face very real competition from fintechs, large institutions, and digital-first platforms promising faster and more streamlined services. The top three challenges identified in BNY’s survey are:

By adopting tools such as instant payments and automated loan processing, community banks can enhance service speed and operational efficiency, better positioning themselves to meet customer expectations and compete with digital-first players. Strategic partnerships can also help community banks bridge these gaps. Fintech collaborations provide scalable technological solutions, while non-fintech partnerships expand service offerings and strengthen local engagement.5 Practical Steps for Community Financial Institutions (CFIs) To CompeteTo stay competitive and relevant, you can take the following actionable steps:

The Bigger PictureCFIs have long played a critical role in fostering economic resilience in their communities, particularly by serving small businesses and families. However, rising customer expectations for speed, efficiency, and convenience — coupled with competition from fintech and large institutions — are driving financial institutions to adapt.For example, instant payments can improve customer satisfaction while providing CFIs with a competitive edge in real-time payment solutions. Similarly, automated loan processing accelerates approval timelines and improves operational efficiencies, freeing up staff to focus on relationship-driven services.Strategic partnerships in wealth management and treasury services are another area of opportunity. By partnering with external providers, CFIs can offer expanded solutions to meet the growing needs of small businesses and individuals without the significant cost of developing these services internally.The Path ForwardAs 2025 ramps up, the pace of change is accelerating. CFIs are ready to embrace transformation, but challenges remain. Cybersecurity, customer acquisition, and data analytics are all top concerns for the next five years. However, CFIs can address these hurdles by focusing on technology, building strategic partnerships, and prioritizing innovation. The path to success lies in blending innovation with tradition, ensuring that, no matter how much tech changes, their commitment to serving their communities is stronger than ever.