Bankers are much more optimistic this year than in 2023-24, according to Cornerstone Advisors’ 2025 “What is Going on in Banking” report. CEO Steve Williams and Chief Research Officer Ron Shevlin presented its findings Feb. 19 during an hour-long video conference.
Eighty-three percent of bankers reported being optimistic this year, compared to only 14 percent who were “somewhat pessimistic,” according to the survey, which was taken in December. Shevlin said economic conditions weren’t as strong in 2023, and many financial institutions last year were uncertain over future economic conditions. Williams said bankers now feel better about the growth environment under the Trump administration, with one telling him in recent weeks that they had faced the worst regulatory regime of their careers during the Biden administration.
Despite macro optimism, Williams said he wasn’t aware of a CEO who reported meeting their earnings targets.
Deposit gathering topped the list of concerns for bankers in 2025 as the amount of money market mutual funds has increased to nearly $7 trillion from $3 trillion when the pandemic started. Also, mutual funds, fintechs and challenger banks are becoming more competitive deposit sources. Williams said large fintech players such as Chime and Venmo are attracting younger households with relatively little liquidity.
“This is a systemic, competitive issue,” he said.
Nearly half of banks listed challenger banks as threats to the industry, lower than the 53 percent who cited megabanks and 64 percent who reported large fintechs as threats. Other top issues bankers cited included efficiency/noninterest expenses, cost of funds, cybersecurity and consumer-related fraud. Williams said many regional/community banks face liquidity constraints. Only 20 percent listed the U.S. government as a threat.
Williams said the rapid growth of fintechs will attract more younger customers and diversity into banking. He sees a major chance for small business growth in vertical software-as-a-service providers. Still, Only 16 percent of banks listed fintech partnerships as a driver of growth, down from 29 percent in 2023. Forty percent said fintech partnerships were not a growth driver, up from 30 percent in 2024.
The survey also touched on technology. Forty three percent of bankers plan to use generative AI in their contact center, while 41 percent expect to do so for back-office operations. Thirty nine percent listed fraud management as a top use case, while 30 percent cited marketing.
Shevlin expects product differentiation will be crucial for banks in the coming years. He said banks will hire more chief product officers. Williams said banks must be realistic on what a core provider can give while building a talented team who can use the core to further their strategy. He acknowledged that will be hard for $500 million banks, but deemed the task “critical” for $10 billion financial institutions.
Two-thirds described their bank’s data strategy as “somewhat effective,” while 56 percent said the same for data governance. Forty-eight percent described their banks’ use of data to improve the customer experience as “somewhat effective.” Shevlin said qualitative data — policies, emails and reports — is overlooked in potential AI benefits.
Discussing the regulatory environment, Williams predicted the Trump administration will transfer the Consumer Financial Protection Bureau’s examination responsibilities to the Office of the Comptroller of the Currency while limiting the CFPB’s focus to being a consumer watchdog. He expects the CFPB’s plan to limit the overdraft fees the largest banks can charge will fall by the wayside.