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editor
Dear Readers’
Welcome to Issue 72 of Global Banking & Finance Review.
As financial services continue to adapt to shifting expectations, regulatory demands, and rapid advancements in technology, this issue explores the strategies shaping today’s institutions—from ATM innovation to financial planning and urban transformation.
Featured on our front cover is Frank Baur, Executive Vice President of Operational Excellence at Diebold Nixdorf. Our 2025 Best ATM Services for Europe award was recently granted to Diebold Nixdorf, and this recognition gave us the opportunity to sit down with Frank for an insightful conversation. In “Advancing Banking Services Through Innovation,”, he discusses how AI, automation, and remote monitoring are transforming ATM services. With a strong focus on operational efficiency, scalability, and global consistency, Diebold Nixdorf is redefining how financial institutions approach ATM management (Page 24).
Personal finance decisions can have lasting impact, especially for couples. In “Joint or Separate? Decoding the Best Tax Filing Strategy for Married Couples,”, Dexter Wyckoff of Wycoff & Associates outlines how new tax brackets and individual circumstances influence whether married couples should file jointly or separately (Page 20).
The technology talent shortage is creating hidden costs across the financial sector. In “The Hidden Costs of the IT Skills Gap for UK Financial Services,”, Charlotte Webb of Hyve Managed Hosting examines how IT staffing gaps are affecting cybersecurity, innovation, and operational resilience—along with solutions financial firms can consider (Page 28).
Smart infrastructure is also transforming how cities grow and function. In “Reimagining Tomorrow’s Cities: How Smart Infrastructure Is Redefining Urban Life”, the article explores how urban centers are embedding AI, green energy, and people-first design into the core of development—from Singapore to Mali to Copenhagen (Page 14).
Together, these stories highlight how innovation, resilience, and strategic planning are guiding the financial sector forward.
At Global Banking & Finance Review, we remain committed to bringing you expert perspectives on the forces shaping finance and business. We hope this issue provides useful insight into today’s most relevant challenges and opportunities.
Enjoy the latest edition!
Wanda Rich Editor
Stay caught up on the latest news and trends taking place by signing up for our free email newsletter, reading us online at http://www.globalbankingandfinance.com/ and download our App for the latest digital magazine for free on Google Play and the Apple App Store
Cover story
Executive Vice President for Operational Excellence,
Diebold Nixdorf: Advancing Banking Services Through Innovation
Frank Baur
Diebold Nixdorf
The Digital Banking Revolution: How Neobanks and Traditional Banks Are Shaping the Financial Future
The banking industry is experiencing significant changes driven by the rapid adoption of digital technologies and shifting consumer expectations. What began as a ripple with the emergence of digital-only banks has evolved into a transformative wave of innovation, reshaping how individuals and businesses manage money. As traditional financial institutions and digital challengers converge, the focus is no longer on who’s winning—but on how the entire industry is being redefined.
As 2025 unfolds, the question becomes harder to ignore: who is leading the future of banking—neobanks or traditional banks?
The answer, however, is more complex than a simple comparison.. While neobanks continue to expand rapidly by offering speed, convenience, and customer-friendly digital experiences, legacy banks are investing billions into modernization, leveraging their scale and trust to maintain relevance. The result is an industry evolving at pace, where the distinction between old and new is less about origin and more about adaptability.
The Rise of the Digital Challengers
Neobanks are reshaping the financial services industry with remarkable speed. The global neobanking market, valued at USD 143.29 billion in 2024, is projected to surge to USD 3,406.47 billion by 2032, reflecting a compound annual growth rate (CAGR) of 48.9%, according to Precedence Research. This explosive growth underscores the rising appeal of digital-first banking models that prioritize convenience, accessibility, and speed.
Among the standout players, Revolut has emerged as a symbol of the sector’s scalability and ambition. In November 2024, Revolut announced it had surpassed 50 million customers globally, including 10 million in the UK alone.
Much of this momentum is fueled by neobanks’ ability to reach underserved populations. An estimated 1.5 billion adults globally remain unbanked, with an additional 2.8 billion considered underbanked—those with limited access to full-service financial products. Neobanks capitalize on this gap by eliminating traditional barriers like physical branches, lengthy onboarding, and high fees, offering instead mobile-first platforms that resonate with digital natives, gig economy workers, and financially excluded groups worldwide.
Traditional Banks: The Digital Transformation Challenge
Traditional banks are far from idle in the face of digital disruption. While often perceived as slower to adapt, many legacy institutions have invested heavily in digital transformation initiatives to stay competitive. However, the path forward has proven to be complex. According to McKinsey, only 30% of banks that have undertaken digital transformations have successfully implemented their strategies. Challenges typically stem from entrenched legacy systems, siloed operations, and resistance to organizational change— factors that continue to inhibit agility and innovation.
Despite these hurdles, progress is evident. Traditional institutions are increasingly succeeding in shifting customer behavior to digital channels. According to Alkami’s 2024 Digital Banking Performance Metrics Report, active digital banking users as a percentage of checking accounts reached 77% in 2024, up year-over-year. This growth demonstrates that while traditional banks may not move as quickly as their digital-native counterparts, they continue to leverage their scale, regulatory credibility, and established trust to adapt and compete.
For many incumbents, the goal is not simply to digitize existing services but to reimagine them. From modernizing core infrastructure to integrating cloudbased solutions and AI, traditional banks are gradually learning to adopt more agile, customer-centric models without compromising compliance or risk standards. The result is a more competitive and hybrid financial ecosystem where innovation is no longer the exclusive domain of neobanks.
The Competitive Landscape: Where Strengths Are Emerging
Customer Experience
Neobanks have set new standards in digital banking by offering intuitive, mobile-first interfaces that allow users to open accounts, monitor spending, and manage finances with just a few taps. This level of ease appeals strongly to tech-savvy customers seeking convenience and speed. In contrast, traditional banks are still catching up, often hampered by legacy systems that can make digital interactions slower and less seamless. A comparison of customer experience between traditional banks and neobanks highlights the growing preference for the agility and usability of digital-first platforms.
Trust and Security
Traditional banks continue to hold a significant advantage when it comes to consumer trust. Their long-standing reputations, established regulatory frameworks, and physical presence provide a sense of security, especially for customers making high-value transactions or seeking in-person advice. Meanwhile, trust remains a barrier for neobanks, particularly among older demographics or in markets where face-toface relationships still matter. According to the 2021 Banking Impact Report, only 7% of consumers and 8% of businesses said they trust neobanks more than traditional banks.
Innovation Speed
Freed from the burden of legacy infrastructure, neobanks can push updates and launch features at a rapid pace. Many offer cutting-edge tools like crypto wallets, savings automation, and budgeting insights far ahead of their traditional counterparts. Although incumbent banks face longer development cycles and internal approval hurdles, some are closing the gap. For example, Chase UK has topped digital banking satisfaction surveys, outperforming several digital-native competitors thanks to targeted innovation and strong execution.
Profitability and Sustainability
Traditional banks benefit from diversified revenue streams, established lending operations, and mature risk management practices—making them more consistently profitable. Neobanks, while often experiencing explosive growth, tend to focus on scale over immediate margins. However, recent findings suggest a promising future: a 2023 Bain & Company study revealed that neobanks are outperforming incumbents in Net Promoter Scores, signaling rising customer satisfaction and potential for long-term retention.
Ultimately, the competitive landscape is not defined by a clear winner in every category, but by a dynamic balancing act. Neobanks excel in speed, simplicity, and user experience, while traditional banks offer trust, scale, and financial resilience. As digital transformation continues to accelerate, success will hinge on how effectively each side can learn from the other—combining agility with reliability to meet the evolving expectations of modern banking customers.
The Challenges Both Sides Face
Neobanks' Hurdles
Despite rapid growth and strong user acquisition, neobanks face a range of structural and strategic challenges.
Regulatory Complexity
Operating across jurisdictions requires navigating a complex web of financial regulations. Unlike traditional banks, which have spent decades building compliance infrastructure, many neobanks must construct these frameworks from the ground up while keeping pace with evolving legal standards. The need to balance innovation with risk management is an ongoing challenge, especially in heavily regulated markets.
Customer Retention & Primary Use
While onboarding processes are fast and appealing, retaining users—and converting them into primary account holders—remains a persistent issue. Many consumers continue to treat neobanks as secondary accounts, relying on them for budgeting or everyday transactions while keeping their primary financial relationships with traditional banks. According to Galileo research, the majority of users in the U.S. still default to traditional banks for core banking services. This behavior limits average revenue per user and impacts long-term profitability.
Physical Absence & Trust Gaps
Neobanks’ cost advantages come in part from their absence of physical branches, which allows for lower fees and leaner operations. However, this model can alienate customers who prefer in-person service—especially in complex financial scenarios or in cultures where relationship banking remains important. Building brand trust remains one of the biggest barriers to mainstream adoption.
Cybersecurity Pressures
As digital-native platforms, neobanks must maintain robust cybersecurity standards without sacrificing usability. A single breach can significantly damage credibility. Continuous investment in security, fraud detection, and user protection is not optional—it’s fundamental.
Traditional Banks' Challenges
Legacy financial institutions face a different set of structural and cultural barriers as they adapt to a digital-first world.
Technology Infrastructure
Legacy technology infrastructure remains the Achilles' heel of traditional banks. These institutions often operate on core banking systems that are decades old, making integration with modern technologies complex and costly. Indeed, the numbers tell a sobering story—only about 30% of banks successfully complete their digital transformation projects. The majority struggle significantly due to the inherent complexity of modernizing outdated systems without interrupting their ongoing operations and services.
Organizational Culture & Siloed Structures
Organizational culture and resistance to change pose significant internal challenges. Traditional banks often struggle with siloed departments, hierarchical decision-making processes, and employees hesitant to embrace new working methods. This cultural inertia can slow innovation, making competition with agile neobanks difficult. The challenge extends beyond technology to encompass new approaches to customer service, product development, and risk management.
Cost Structures & Branch Networks
Maintaining large physical networks, operational staff, and legacy IT contributes to significantly higher cost structures compared to digital-only banks. As more transactions shift online, traditional banks must make difficult decisions around optimizing—or reducing— their physical footprint while still serving customers who depend on branch-based services.
Data Utilization
Traditional banks have access to vast amounts of customer data but often struggle to integrate and analyze it effectively. Without unified data platforms, offering hyper-personalized experiences—something many neobanks excel at—remains a work in progress.
Talent Acquisition
Traditional banks face significant challenges in attracting and retaining skilled professionals, particularly in high-demand areas like cybersecurity, AI, and data analytics. With growing competition from fintech firms and tech giants, incumbents must rethink compensation. While both neobanks and traditional banks continue to evolve, their respective challenges underscore the complexity of staying competitive in an increasingly digital world. The path forward will not be shaped solely by current capabilities, but by how well each can position themselves for the next phase of banking innovation. As the industry looks ahead, several key battlegrounds are emerging—areas that could define who leads in the years to come.
The Next Phase of Digital Banking
As the digital banking revolution progresses, the next phase of competition will be shaped not just by who adapts fastest, but by who innovates most strategically. Several key fronts are emerging where both neobanks and traditional banks are investing heavily to secure long-term relevance.
Artificial Intelligence and Automation
The role of AI in banking is set to deepen dramatically. By 2025, AI will play a central role in banking operations, powering everything from customer service chatbots to fraud detection, credit scoring, and personalized financial insights. Neobanks, with their agile infrastructures, are often quicker to deploy AI-driven features. However, traditional banks are rapidly investing in AI and automation to streamline operations and enhance customer engagement at scale.
Embedded Finance
The integration of banking services directly into non-financial platforms—such as e-commerce, ride-sharing, and software ecosystems—is redefining how and where consumers interact with financial tools. Neobanks often lead in this space due to their flexible APIs and cloud-native systems, allowing them to plug seamlessly into third-party environments. Traditional banks, while playing catch-up, are increasingly forming partnerships or developing Banking-as-a-Service (BaaS) capabilities to remain part of this evolving financial ecosystem.
Sustainable and Responsible Banking
Environmental, Social, and Governance (ESG) considerations are now a strategic priority for financial institutions globally. From green financing products to carbon tracking tools, both neobanks and incumbents are racing to meet growing consumer and regulatory expectations around sustainability. While traditional banks often lead in large-scale ESG financing, neobanks are innovating with tools that allow consumers to track their environmental impact or invest in socially responsible funds directly from their mobile apps.
Market Capacity and Coexistence
Despite the competitive narrative, the industry is far from a zero-sum game. The digital banking market was valued at $10.9 trillion in 2023, reflecting enormous room for growth across customer segments, technologies, and geographies. Neobanks and traditional banks are increasingly learning from one another—blending innovation with stability—to serve an evolving, digitally native customer base.
Looking Ahead
The future of banking will not be defined by whether an institution began as a neobank or a traditional bank—it will be defined by its ability to evolve. The most successful players will be those that blend technological agility with financial resilience, meeting customer expectations without compromising trust, compliance, or profitability.
As digital channels become the primary touchpoint for banking services, the line between incumbents and challengers will continue to blur. Traditional banks are modernizing at pace, while digital-first institutions are maturing into fullservice providers. The industry is moving toward a hybrid model—one that combines the best of innovation and infrastructure.
In the end, the defining question will not be who started where, but who can deliver the most value to customers in an increasingly digital, data-driven, and customer-centric world. The digital banking revolution is not a battle to be won, but a transformation to be mastered.
Digital Identity and Financial Security: Are We Ready for a Password-Free Future?
The password has been our digital gatekeeper for decades. But like a rusty old lock that's starting to fail, it's showing its age. The financial sector now stands at a crossroads, facing a future where passwords could become as obsolete as paper bankbooks.
According to Fortune Business Insights, the global passwordless authentication market is projected to grow from $21.58 billion to $60.34 billion by 2032, reflecting a compound annual growth rate of 15.8%. But numbers only tell part of the story. The real question is: Are we ready to trust our financial lives to a password-free future?
The Breaking Point: Why Passwords Are Failing Us
Passwords were never designed to handle the complexities of modern digital life. What once served as a simple safeguard has become a significant liability. According to Syniverse, 50% of users require at least two attempts just to create a password, leading to increased frustration and higher abandonment rates for financial institutions.
The issue extends beyond convenience to critical security concerns. Research indicates that over 80% of organizational data breaches are caused by weak or stolen passwords. Cybercriminals have industrialized credential theft, utilizing phishing kits, credential-stuffing tools, and dark web marketplaces to exploit outdated password systems.
Consumers are now expected to manage numerous unique, complex passwords, change them regularly, and avoid reuse—a task that is both impractical and insecure. In the financial sector, where trust and security are paramount, relying on this outdated model is no longer viable.
The Rise of Passwordless Authentication
Passwordless authentication is no longer a futuristic concept — it’s here, and adoption is accelerating faster than many predicted. According to the FIDO Alliance, passwordless sign-ins using passkeys are now supported across more than 7 billion online accounts globally.
This is more than just a trend; it marks a fundamental shift in how we think about digital access and identity. Passwordless authentication removes the need for traditional passwords altogether, replacing them with secure, user-friendly alternatives. These include:
• Biometric verification, such as fingerprint, facial, or voice recognition
• Hardware security keys that provide physical proof of identity
• Cryptographic tokens, which use public-private key pairs to verify users without transmitting sensitive data
• Multi-factor authentication (MFA) systems that combine multiple methods for added security
When using a passkey, a private key remains securely on your device, while only a public key is shared with the service provider. This design prevents attackers from stealing login credentials — even in the event of a server breach. PayPal explains how passkeys enable a safer, more seamless authentication experience.
Real-world adoption further validates this momentum. Tech giants like Apple, Google, and Microsoft have pledged support for passwordless authentication across their platforms. Financial service providers such as PayPal and Intuit have already begun integrating passkeys into their user authentication systems, reporting higher security and improved user experience.
Momentum is also building across platforms. Microsoft now allows users to sign in to consumer accounts using passkeys across Windows, Google, and Apple ecosystems. Apple has enabled users to create and store passkeys for secure sign-ins on websites and apps without relying on passwords.
With broad compatibility and growing trust from both users and providers, passwordless authentication is quickly becoming the industry standard — and financial institutions are taking notice.
The Financial Sector's Digital Identity Revolution
Banks and financial institutions are no longer just adopting passwordless solutions — they’re helping to define what the future of digital identity looks like.
As the threat landscape becomes more sophisticated, financial services firms are moving beyond traditional username-password models and embracing identity as a security perimeter. In this new paradigm, verifying who a user is — and how they access services — is just as important as safeguarding the transaction itself.
A report from Technology Record notes that financial institutions are turning to identity-centric approaches, incorporating biometrics, behavioral analytics, and contextual risk signals to create more seamless and secure user experiences. These systems aim to strike a balance between zero-trust security and user convenience, especially as consumers demand faster, frictionless access to digital banking services.
The shift is also being driven by the massive scale of digital interactions. According to Juniper Research, global digital identity verification checks will reach 86 billion in 2025, a 17% increase from the previous year. This surge reflects growing demand for highassurance authentication across banking, fintech, and payment platforms.
This isn’t just about how people log in — it’s about how banks verify trust in real time. From onboarding to transaction approval, financial institutions are reimagining the digital identity lifecycle as a fluid, adaptive process, not a one-time checkpoint.
Those leading this transformation aren’t just deploying new technology — they’re reshaping the definition of digital trust in finance.
The Role of Artificial Intelligence and Modern Security
The integration of artificial intelligence (AI) into passwordless authentication is transforming cybersecurity. AI serves as both a defensive asset and a potential threat vector. As identity-based attacks become more sophisticated, organizations must adapt swiftly. According to SC World, the future of identity security involves countering AI-driven cyber threats, including machine identity exploits and deepfake-enabled fraud.
For financial institutions, the stakes are particularly high. Traditional authentication systems often lack the agility to respond to dynamic, real-time threats. AI-powered, passwordless frameworks offer a solution by detecting behavioral anomalies and adjusting risk profiles instantaneously. Microsoft highlights how User and Entity Behavior Analytics (UEBA) can identify unusual activities, enhancing threat detection capabilities.
The financial implications of outdated authentication models are significant. IBM's 2024 Cost of a Data Breach Report reveals that the global average cost of a data breach has reached $4.88 million, marking a 10% increase from the previous year. This underscores the urgent need for more adaptive and resilient authentication systems.
By integrating biometric authentication with AI-driven analytics and contextual decision-making, passwordless platforms offer a more intelligent and secure approach to identity management. Financial institutions adopting these technologies are not only safeguarding user data but also establishing a foundation for enduring digital trust.
Challenges in the Passwordless Landscape
Despite the growing momentum behind passwordless authentication, the transition is far from seamless. Financial institutions must navigate a complex web of technical, regulatory, and security-related hurdles as they move away from legacy systems.
Security remains a critical concern. While passwordless systems eliminate traditional credential theft, they are not immune to compromise. According to the Forbes Technology Council, even modern passwordless factors — such as biometrics or digital tokens — can be targeted by attackers. Tokens may be intercepted, biometric data can be spoofed with deepfakes, and sophisticated phishing attacks can still manipulate user behavior.
Another major obstacle is infrastructure. Many financial institutions still operate on legacy core banking systems that were never designed to support biometric data or cryptographic identity keys. As noted in a recent Bob’s Guide financial report, integrating modern authentication methods into aging tech stacks often requires extensive and costly overhauls — particularly when balancing compliance, system compatibility, and customer experience.
Then there’s the challenge of data privacy. Passwordless methods frequently rely on biometric identifiers or devicelinked credentials. While this reduces password fatigue, it raises new questions: Where is this sensitive data stored? How is it protected? Who controls it? Ensuring that biometric and identity data are encrypted, anonymized, and ethically handled is now a non-negotiable requirement for earning user trust and regulatory approval.
Ultimately, the promise of passwordless authentication is real — but realizing that promise requires a deliberate, strategic, and security-first approach to transformation.
The Trust Equation: Consumer Perspectives
The success of passwordless authentication hinges not only on technological advancements but also on consumer trust. Without user confidence in the security and usability of these systems, widespread adoption remains elusive.
According to a study by PYMNTS, 24% of U.S. consumers consider encryption the most critical factor in evaluating the security of apps and platforms. Furthermore, nearly half of users believe passwordless logins mitigate fraud risks — a clear sign that consumers are not only aware of the shift but increasingly expect more secure, seamless options.
The financial sector is responding. A report from OneSpan notes that 78% of U.S. consumers now prefer digital or mobile banking channels, providing the perfect environment to roll out passwordless solutions. With customers already accustomed to digital platforms, device-based authentication and biometrics are more likely to be embraced — especially if they reduce friction and increase perceived security.
Still, the scars from traditional credential-based systems remain. A GoodFirms study found that 30% of users have experienced a security breach due to weak passwords, underlining the risks tied to outdated authentication. These failures aren’t just technical — they’re deeply personal, eroding user trust and highlighting the need for systems that don’t rely on flawed memory-based security.
Ultimately, passwordless authentication isn’t just a matter of convenience — it’s about restoring confidence. Consumers want systems that feel effortless, but they also need to know those systems are resilient. Replacing passwords with something more intuitive, secure, and trustworthy is the foundation of that trust.
The Biometric Revolution
Biometric authentication has emerged as one of the most promising pillars of passwordless security. From fingerprint and facial recognition to voice ID and behavioral biometrics, these technologies offer convenience, speed, and a high degree of user assurance. For financial institutions, they represent a crucial step toward delivering secure, frictionless customer experiences.
Yet as adoption accelerates, so do the risks.
According to the Banking Journal, voice biometrics in particular are increasingly vulnerable to deepfake technology, which can mimic tone, cadence, and speech patterns with alarming accuracy. Fraudsters are already leveraging AI-generated voices to bypass authentication checks — raising serious concerns about the future of biometric security.
Real-world implementations highlight both the promise and pitfalls of biometric systems. HSBC offers a “Voice ID” feature, allowing customers to access their accounts by saying, “My voice is my password.” Similarly, Wells Fargo uses voiceprint technology for secure phone authentication. These examples show how major banks are embracing biometrics to streamline customer experience and reduce friction in authentication.
But vulnerabilities persist. In a widely circulated VICE experiment, a journalist was able to access his own bank account using an AI-generated clone of his voice. The demonstration exposed how current voice verification systems — without liveness detection or secondary verification — can be susceptible to deepfake manipulation.
This challenge underscores a broader reality: while biometrics offer a stronger front door, they’re not infallible. Implementation must go beyond simply deploying facial or voice recognition; it must include multi-layered defense strategies, such as real-time liveness detection, behavioral biometrics, and contextual risk assessment.
An analysis by Eastern Peak highlights the growing role of biometrics in banking, while also pointing out key hurdles. These include accessibility limitations, privacy concerns, and variability in device quality — all of which can impact the consistency and effectiveness of biometric systems across a diverse user base.
To navigate this revolution, financial institutions must strike a delicate balance: ensuring security while maintaining ease of use. That means rigorously testing biometric systems, educating users, and incorporating fallback methods that don’t compromise security. The promise of biometrics is powerful — but without careful, ethical implementation, it risks becoming just another vulnerable surface in the fight for digital trust.
Embracing the Inevitable Transformation
The passwordless future is rapidly approaching. OneSpan's latest projections suggest that by 2025, more than half of the workforce and over 20% of customer authentication transactions will be passwordless. This transformation is supported by a robust market growth trajectory, with Globe Newswire reporting that the global passwordless authentication market reached $923.3 million in 2024 and is poised for significant expansion.
The question isn't whether we're moving to a passwordless future – it's how smoothly we'll make the transition. With the passwordless authentication market growing at a CAGR of 15.8%, the financial sector is placing a decisive bet on this technology. Yet the transition extends beyond mere market projections.
The banking industry stands at the forefront of this revolution, with 80% of consumers actively taking measures to protect their online privacy. This heightened awareness, combined with 78% of US consumers preferring digital banking channels, creates a perfect storm for passwordless adoption.
Financial institutions must recognize that success in this transition requires more than technological implementation. It demands a fundamental shift in how we think about digital identity and trust. The Digital Trust Index 2025 reveals that nearly one in five consumers have experienced data compromises in the past year, underlining the urgency of this transformation.
The path forward requires a delicate balance between innovation and security, between convenience and protection. Financial institutions that succeed will be those that not only implement robust passwordless solutions but also invest in educating their customers and building trust in these new systems. As we move through 2025 and beyond, the financial sector's ability to navigate this transformation will define not just the future of authentication, but the future of digital finance itself.
The password-free future isn't just coming – it's already here. The question now is whether we're ready to embrace it fully and responsibly. For the financial sector, this isn't just an opportunity to enhance security; it's a chance to redefine the relationship between people and their digital financial lives. The success of this transition will depend not on the technology alone, but on our collective willingness to imagine and implement a more secure, more convenient, and more human-centered approach to digital identity.
Reimagining Tomorrow’s Cities: How Smart Infrastructure Is Redefining Urban Life
Urbanization isn’t just picking up speed — it’s reshaping how we live, work, and connect. As millions move into cities each year, the pressure’s on to build places that aren’t just larger, but smarter.
This shift isn’t about adding more roads or high-rises. It’s about embedding intelligence into the bones of our cities — using realtime data and human-centered design to create spaces that are not only efficient but truly livable. In this next chapter of global growth, smart cities aren’t a side trend — they’re becoming the model for a more resilient, connected urban future.
The Great Urban Shift
The world is undergoing its biggest wave of urbanization in recorded history. According to the United Nations, about 58% of people now live in cities — and by 2050, that number is expected to hit 68%, adding more than 2.5 billion people to urban areas. Most of that growth will happen in developing regions, especially across Asia and Africa, putting serious strain on infrastructure, housing, transit, and the environment.
But this isn’t just more expansion. Cities are no longer static grids of concrete and steel. They’re becoming adaptive ecosystems — shaped by data, algorithms, and smart infrastructure. This shift is pushing governments, developers, and private-sector leaders to rethink how cities are planned, financed, and managed in a connected world.
The Technology Backbone
Modern cities are becoming more dynamic and responsive — functioning less like static structures and more like living systems. At the heart of this evolution is a digital nervous system: a network of sensors, automation, AI, and real-time data that helps cities react to what’s happening on the ground.
This tech infrastructure is changing how cities work, from managing energy and easing traffic to speeding up emergency response and improving access to public services. According to the McKinsey Global Institute, smart technologies can improve key metrics like commute times, water quality, and emergency response by 10 to 30 percent.
Smart Infrastructure
Often described as the "brain" of the modern city, smart infrastructure relies on advanced IoT networks to connect critical urban systems — from traffic management and utilities to public services and waste. These networks are the foundation of datadriven decision-making, helping cities respond to changing conditions in real-time with greater efficiency and sustainability.
Singapore has long been known as a global leader in intelligent transport systems. Its Green Link Determining (GLIDE) system uses real-time sensors to adjust traffic signals based on road conditions, helping reduce congestion and cut delays. Combined with other digital tools like Electronic Road Pricing (ERP), Singapore’s coordinated infrastructure strategy has placed it at the forefront of urban mobility innovation.
In Europe, Ghent’s comprehensive traffic management platform gives residents real-time updates on roadworks, accidents, and parking availability. By pulling from multiple data sources, the system helps travelers make quicker decisions while supporting the city’s broader shift toward sustainable transport.
Energy Revolution
As cities grow, managing energy demand sustainably is becoming a top priority. Smart grids and district heating systems aren’t just ideas on paper — they’re being deployed across both developed and developing countries, bringing efficiency gains, lower emissions, and long-term savings.
In Stockholm, Sweden, a district heating network now supplies over 75% of the city’s heating demand. The system captures heat from wastewater, incineration, and even data centers and supermarkets — helping the city reduce emissions while keeping energy affordable.
In the U.S., cities like Austin and Boulder are modernizing their energy systems through smart grid technologies. These platforms use real-time data and advanced analytics to balance supply and demand, stabilize the grid, and make it easier to plug in renewable energy sources.
Meanwhile, in Mali, small-scale innovation is making a significant impact. In the village of Karan, a solar-powered microgrid built by WeLight has brought reliable electricity to homes and businesses for the first time — powering everything from bakeries to gaming centers. It’s a clear example of how energy access can improve daily life and open new possibilities for underserved communities.
These diverse approaches reflect a global shift: cities embrace intelligent energy systems to meet demand, build resilience, and support local growth.
Digital Twin Technology
One of the most significant shifts in urban planning today is the rise of digital twin technology — virtual models of cities that let planners monitor, simulate, and optimize realworld systems in real-time. These tools allow cities to test ideas before committing to major changes, improving how decisions are made and reducing costly trial and error.
Cities like Aachen, Germany are leading the way. By combining real-time data from transportation, infrastructure, and environmental systems into a unified model, Aachen’s planners can assess performance, evaluate risks, and coordinate decisions across departments. This makes the city more responsive, efficient, and better prepared for future challenges.
Singapore is also setting the pace. Its Virtual Singapore platform is a high-resolution 3D digital twin powered by data from sensors, geographic information systems (GIS), and AI. It allows users to simulate planning scenarios, run disaster response drills, and fine-tune infrastructure design. By integrating multiple layers of real-time and spatial data, the platform has become a model for how governments can use digital intelligence to support sustainable, forward-looking urban development.
According to a review published in the Journal of Cleaner Production, digital twin platforms powered by AI, IoT, and machine learning are increasingly used to improve everything from emergency planning to carbon tracking. As technology matures, digital twins are becoming a central tool in designing cities that are both data-driven and people-centered.
Singapore’s Virtual Singapore initiative offers another leading example. This high-fidelity 3D digital twin allows users to simulate urban planning decisions, test disaster response strategies, and optimize infrastructure design in real-time. The project has become a global benchmark in how governments can use digital twins to drive sustainable urban growth.
A review published in the Journal of Cleaner Production notes that as digital twin platforms powered by AI and IoT become more advanced, they’re helping cities move beyond static plans and toward continuous, real-time decision-making — a shift that could redefine how we design, manage, and live in urban spaces.
The Human Element
Technology alone doesn’t make a smart city. The most forward-thinking urban leaders understand that cities are about people — not just systems, sensors, or data. As digital tools become more integrated into daily life, human-centered design is becoming a core part of how cities are planned.
The World Economic Forum says that truly adaptive cities must emphasize inclusivity, accessibility, and well-being alongside technological advancement. This mindset is encouraging planners to look beyond efficiency — and ask how cities support daily life, from access to public services to mental health, mobility, and community belonging.
This people-first mindset is driving innovative urban models that reflect how residents live, work, and move — as seen in the rise of proximity-based planning, hybrid developments, and green public spaces.
Urban planners are rethinking how neighborhoods function — and proximity is becoming central to that shift. More cities are exploring ways to ensure that daily needs are within walking or cycling distance. The goal isn’t just convenience; it’s reducing congestion, cutting emissions, and making urban life more livable.
The idea of the 15-minute city — where residents can reach work, school, healthcare, shops, and parks without relying on cars — was developed by urbanist Carlos Moreno and later adopted by the City of Paris as a guiding vision for urban transformation. Mayor Anne Hidalgo made the concept a central part of her 2020 re-election campaign and put it into action during the COVID-19 pandemic. Her administration expanded bike infrastructure, pedestrianized key streets, and transformed schools and public spaces to bring essential services closer to where people live.
In the U.S., Portland’s “20-minute neighborhoods” offer a local take. This long-term strategy aims to make sure 90% of residents can walk or bike to daily essentials — groceries, schools, parks — within 20 minutes. It’s part of a broader push for equity, climate action, and better connectivity, backed by investments in public transit and compact, mixeduse development.
These models point toward a return to the neighborhoodscale living within the modern city — where design serves people, not just traffic.
Proximity Planning: 15-Minute Cities and Walkable Urban Futures
Hybrid Spaces: The Evolution of Urban Living
As the lines between work, home, and community continue to blur, cities are rethinking how space is used. Hybrid environments — places that combine living, working, and leisure — are becoming a key feature of urban design. These flexible, multipurpose spaces reflect a broader shift toward planning that responds to how people live.
One of the emerging trends identified by CitiesToBe is the rise of developments that mix public, private, and community uses in a single location. These hybrid models make better use of land while also supporting everyday connection, activity, and quality of life.
In Barcelona, the 22@ Innovation District stands as a clear example. A former industrial zone, it has been transformed into a vibrant neighborhood that brings together housing, offices, research centers, and green spaces all within walking distance.
Tokyo takes a different approach by emphasizing “third places” — settings that are neither home nor work but somewhere in between. Projects like Ginza Sony Park and WeWork Shibuya Scramble Square offer flexible spaces for creativity, collaboration, and casual socializing in the middle of one of the world’s most densely populated cities.
By reimagining how spaces serve people, cities are creating more adaptable, resilient environments — built not just for productivity but for life.
Green Infrastructure: Building Sustainable Urban Environments
The use of green infrastructure to make urban environments healthier, more resilient, and more livable is increasing. Parks, tree canopies, green roofs, and other nature-based solutions help manage stormwater, clean the air, lower temperatures, and create public spaces that bring people together.
A study published in the Journal of Cleaner Production highlights the importance of embedding green infrastructure into resilience planning for climate adaptation and improving daily quality of life. From biodiversity to mental health, the benefits stretch far beyond aesthetics.
In Copenhagen, city policy requires green roofs on all new municipal buildings with slopes under 30 degrees. These rooftops help manage stormwater, reduce the urban heat island effect, and support biodiversity — all while contributing to the city's goal of becoming carbon neutral by 2025.
New York City's High Line shows what’s possible when old infrastructure is repurposed into green public space. Once an elevated rail line, it’s now a vibrant urban park lined with native plants, public art, and gathering areas. The project has inspired cities around the world to rethink how they use underutilized structures.
By weaving nature into the fabric of urban design, cities aren’t just solving environmental problems — they’re creating places where people want to live.
Economic Implications
The cost of urbanization isn’t just high — it’s accelerating. The Global Infrastructure Hub estimates that cities will need $97 trillion in infrastructure investment by 2040 to keep pace with population growth, urban expansion, and aging systems. That includes upgrades in transportation, energy, water, and digital connectivity.
Bridging that gap won’t happen through public spending alone. Cities are turning to public-private partnerships, green bonds, and blended finance to unlock new sources of capital while aligning with sustainability goals. These models not only ease pressure on city budgets but also open the door for private investment in urban innovation.
The return on smart infrastructure is already visible. Cities using intelligent transport systems, digital utilities, and real-time service platforms are cutting operating costs and improving service delivery — while strengthening their economic competitiveness.
The Role of Public-Private Partnerships
As infrastructure needs grow and budgets tighten, many cities are turning to public-private partnerships (PPPs) to get major urban projects off the ground. These collaborative models allow governments and private-sector companies to share the cost and responsibility of building and managing essential infrastructure — from transit systems and utilities to housing and digital services.
Research published in Construction Innovation highlights how PPPs are playing a key role in advancing smart city agendas — helping cities accelerate technology deployment, manage long-term risk, and improve digital service delivery. The combination of public oversight and private-sector agility is especially valuable in complex, tech-driven projects.
Flexible frameworks like Build-Operate-Transfer (BOT), Design-Build-Finance-Operate (DBFO), and concession agreements give cities options for delivering large-scale projects while tying compensation to long-term outcomes.
PPPs are already driving innovation in areas like smart mobility, waste management, and renewable energy. In Sweden’s first climate-smart district, Hyllie, Malmö, the city works with energy providers to integrate clean energy and smart utilities. In Dubai, PPPs are central to the Smart City initiative — supporting sustainability infrastructure and digital governance. Similarly, Medini Iskandar, Malaysia, a master-planned urban district, was developed through a PPP model that blends public planning with private investment in housing, transit, and urban tech.
When structured with transparency and shared incentives, PPPs do more than fund infrastructure — they help cities scale smart, sustainable systems that deliver long-term public value.
TECHNOLOGY
Corporate Cities: Private Sector Visions for Urban Futures
As the boundaries between business and urban development continue to blur, a new type of city is emerging — one funded, designed, or operated by corporations. These aren’t the company towns of the past but experimental communities that embed smart technologies, sustainability systems, and curated design into every layer of urban life.
One of the most high-profile examples is Toyota’s Woven City, a 175-acre prototype smart city under construction near Mount Fuji. Envisioned as a living laboratory, it will test autonomous vehicles, robotics, hydrogen power, and AI-integrated homes in a fully built environment housing employees and researchers.
In Abu Dhabi, Masdar City represents a different kind of corporate-led urban model. Developed by Masdar, a subsidiary of Mubadala Investment Company, the city is home to clean tech firms, startups, R&D hubs, and residents, all sharing eco-friendly infrastructure designed to support low-carbon living.
The Hyllie district in Sweden offers another view of how corporate leadership is shaping smart cities. As noted earlier in the discussion on public-private partnerships, Hyllie also reflects a broader vision led by the utility company. E.ON played a central role in integrating renewable energy systems, smart grids, and district heating, showing how corporate initiatives can drive sustainable urban transformation in close alignment with city goals.
Not all corporate city projects go as planned. In Canada, Sidewalk Toronto — a smart city proposed by Google’s Sidewalk Labs — was canceled in 2020. Although the company cited COVID-19 and economic uncertainty, the project had also drawn criticism over privacy, data ownership, and the role of Big Tech in public space. The case underscored the need for clear governance when private companies shape the city itself.
From bold testbeds like Woven City to more cautionary examples like Sidewalk Toronto, corporate cities show what’s possible — and what’s at stake — when urban innovation is driven by private hands. Success will require more than ambition: it will demand transparency, accountability, and public trust.
Startup Economies: Innovation Engines for the Smart City Era
Startups are playing an increasingly significant role in how cities solve complex challenges — from traffic and waste to energy, housing, and public engagement. Fast-moving, techsavvy, and locally grounded, they bring fresh thinking where traditional institutions often move too slowly.
According to Europe of Cities, the future of urban development depends on inclusive design, locally driven solutions, and digital innovation — all areas where startups excel. They offer a bottom-up approach to smart infrastructure, helping cities become more adaptive, connected, and people-focused.
In cities across Europe, governments are doing more than fund incubators — they’re integrating startup pilots directly into public systems. Projects like Barcelona Activa, Station F in Paris, and Berlin’s Startup Stipendium show how cities can help entrepreneurs test and scale solutions in realworld settings. Globally, platforms like Urban-X in New York, Cyberport in Hong Kong, and iHub in Nairobi are shaping how mobility, sustainability, and digital governance evolve at the street level.
By opening doors through policy, capital, and collaboration, cities can tap into startup ecosystems not just as economic engines but as drivers of meaningful change. The future of smart cities may not come from a single big player — but from thousands of smaller ones building from the ground up.
Challenges and Concerns
Smart cities promise cleaner, faster, more connected urban life — but they also raise serious questions about who benefits, who is protected, and what gets overlooked in the rush to innovate.
One of the biggest concerns is data privacy. Connected systems rely on sensors, surveillance tools, and real-time data collection — often gathering personal information without clear boundaries. Without strong governance, this data can be misused or leaked, eroding public trust.
The digital divide is another growing risk. People without reliable internet access or digital literacy may find themselves excluded from city services or civic participation. If cities aren’t careful, smart systems could deepen inequality rather than solve it.
There’s also the threat of cyberattacks. As more infrastructure comes online — from power grids to public transit — the risk of disruption grows. A single breach could shut down essential services or compromise sensitive data. Resilience and cybersecurity must be built into the system from the start.
Smart cities can’t succeed on technology alone. To move forward, they’ll need to balance innovation with accountability — making sure protections, access, and trust grow alongside the tools themselves.
The Way Forward
The cities of tomorrow won’t be flawless — but they can be more thoughtful, more responsive, and more human than what came before. Getting there will require striking a careful balance: between innovation and inclusion, between efficiency and livability, between ambition and accountability.
The most successful cities will be those that remember who all this is for. Smart tools alone won’t make life better — but when paired with people-first planning, they can help build places where residents feel connected, safe, and supported.
The future isn’t arriving all at once. It’s being shaped now — decision by decision, project by project, at the intersection of policy, design, and everyday life. For today’s urban leaders, the challenge isn’t catching up with technology. It’s making sure that progress leaves no one behind.
Joint or Separate? Decoding the Best Tax Filing Strategy for Married Couples
When you're married, you can choose to file your taxes jointly with your spouse or file separately. Generally, there are more benefits to filing jointly, but there are some situations in which filing separately could result in a lower tax bill. Working with a financial advisor and a tax professional can help you decide the best way to file your taxes.
Life changes quite a bit once you say, "I do." One of the less social media-worthy changes (although still very important) is your tax filing status. You can no longer file taxes using single status, but you have a few options. The good news is that the IRS has released new tax brackets for 2025, which have increased, meaning that you'll have to make more money before the amount you owe jumps up progressively.
The IRS allows five options to select from when determining tax filing status: single, married filing jointly, married filing separately, head of household, and qualifying widow(er) with dependent child. Generally speaking, a married person is limited to two of these options: married filing jointly or married filing separately.
Married Filing Jointly vs. Married Filing Separately
If you decide to file your taxes jointly, you and your spouse will submit a single tax return that encompasses both of your incomes, deductions, and credits. This combined return will be taxed based on your joint taxable income, and you will both share responsibility for any tax liabilities.
Conversely, if you file separately, each spouse will submit an individual tax return reflecting their income, deductions, and credits. Separately filing taxes means you will be taxed independently on your income, and each will be solely responsible for their tax obligations, which may be at different rates. The choice between filing jointly or separately will significantly influence several critical aspects of your tax return, including:
• The tax credits you are eligible for,
• Your tax rate,
• The deductions you can claim, and
• Your annual income threshold can affect eligibility for certain benefits like contributions to a Roth IRA.
Married but filing separately have similar tax brackets as individual filers except at 35 and 37 percent.
• 10 percent: Up to $11,925
• 12 percent: $11,926 to $48,475
• 22 percent: $48,476 to $103,350
• 24 percent: $103,351 to $197,300
• 32 percent: $197,301 to $250,525
• 35 percent: $250,526 to $375,800
• 37 percent: Over $375,800
Married Filing Jointly:
• 10 percent: Up to $23,850
• 12 percent: $23,851 to $96,950
• 22 percent: $96,951 to $206,700
• 24 percent: $206,701 to $394,600
• 32 percent: $394,601 to $501,050
• 35 percent: $501,051 to $751,600
• 37 percent: Over $751,600
How Does Married Filing Jointly Work?
Tax returns filed jointly are done through one tax return that includes both your own and your spouse's income, deductions, and credits. Once you've determined your combined taxable income, you'll apply the income tax rate for your tax bracket to calculate how much you'll jointly owe in taxes.
Dexter Wyckoff, Field Director, Wycoff & Associates, Northwestern Mutual
How Does Married Filing Separately Work?
If you choose to file separately, you and your spouse will each fill out your own tax return reflecting your income, as you did before marriage. However, when deciding which deductions to take, you and your spouse must use the same method. Either both of you can take the standard deduction, or you both can itemize. One of you cannot take the standard deduction while the other itemizes.
When you file separately, your deduction amounts are typically reduced, and eligibility for credits is assessed on an individual basis. Consequently, you will generally qualify for fewer tax credits compared to filing jointly.
Married couples often choose to file separately due to significant income discrepancies between partners. If you reside in a "community property state," filing separately requires each spouse to report their income and half of any "community income" derived from jointly-owned assets.
Additionally, only one spouse can claim shared dependents on their return when filing separately. According to the IRS, the parent with whom the child lived for most of the year has the primary right to claim the dependent. If the child spent equal time with both parents, the parent with the higher adjusted gross income gets the claim.
Married Filing Separately vs. Head of Household
A common misconception is that if one spouse doesn't work, the working spouse can file taxes as a head of household. In reality, the head of household status is designed for unmarried individuals who financially support a dependent, such as a child, sibling, or parent, but typically not a spouse. Married individuals are generally not eligible to file as head of household except in very limited circumstances.
Head of Household:
10 percent: Up to $17,000
12 percent: $17,001 to $64,850
22 percent: $64,851 to $103,350
24 percent: $103,351 to $197,300
32 percent: $197,301 to $250,500
35 percent: $250,501 to $626,350
37 percent: Over $626,350
Is It Better to File Jointly or Separately?
There are plenty of benefits to filing taxes jointly. For most married couples, filing taxes jointly usually results in the most available deductions, the most eligibility for tax credits, and the smallest tax impact. However, there are some particular circumstances in which filing separately might be more advantageous.
Specific Situations:
• One of you is repaying student loans: Filing separately could significantly reduce your loan payments if you or your spouse repays student loans on an
• income-based repayment plan.
• One of you incurred significant medical expenses: A spouse with a lower income would be eligible to deduct more expenses.
• You're separated or in the process of divorcing: It may be more straightforward to split your tax responsibilities.
• Legal issues: If one partner is suspected of a crime like fraud, it could benefit the other partner to file separately.
Disadvantages of Filing Separately
Filing separately generally has the disadvantage of reducing your eligibility for deductions and credits. The standard deduction is higher for joint filers, meaning that by filing separately, you typically decrease the amount you can deduct at your highest tax rate. In 2025, the standard deduction for married couples filing jointly is $30,000, while $15,000 per spouse is for those filing separately. For many couples, one partner earns significantly more than the other. The portion of the deduction used by the lowerearning spouse falls under a lower tax rate, making it less advantageous for the couple overall.
If you file separately, you will no longer be eligible to claim certain education credits, such as the American Opportunity Tax Credit or the Lifetime Learning Credit. You will also forfeit the ability to claim the Child and Dependent Care Tax Credit or the Earned Income Tax Credit.
Ultimately, in most cases, married couples will benefit from filing jointly. The primary reasons to file separately include significant income discrepancies, substantial itemized deductions, separation or divorce, and legal issues. As you and your spouse discuss your finances, consider connecting with your financial advisor and tax professional to guide you through the best options for your situation.
For more information and personalized advice, consult a Northwestern Mutual financial advisor and tax advisor.
This publication is not intended as legal or tax advice. Financial Representatives do not render tax advice. Consult with a tax professional for tax advice that is specific to your situation.
Article prepared by Northwestern Mutual with the cooperation of Dexter Wyckoff. Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM) (life and disability Insurance, annuities, and life insurance with long-term care benefits) and its subsidiaries, including Northwestern Mutual Investment Services, LLC (NMIS) (investment brokerage services), a registered investment adviser, broker-dealer, and member of FINRA and SIPC and Northwestern Mutual Wealth Management Company® (NMWMC) (investment advisory and trust services), a federal savings bank. NM and its subsidiaries are in Milwaukee, WI.
Dexter T Wyckoff uses Wyckoff & Associates as a marketing name for doing business as a representative of Northwestern Mutual. Wyckoff & Associates is not a registered investment adviser, broker-dealer, insurance agency or federal savings bank. Dexter T Wyckoff is an Insurance Agent of NM. Investment brokerage services provided by Dexter T Wyckoff as a Registered Representative of NMIS. Investment advisory services provided by Dexter T Wyckoff as an Advisor of NMWMC.
Diebold Nixdorf: Advancing Banking Services Through Innovation
Our 2025 Best ATM Services for Europe award was recently granted to Diebold Nixdorf. This allowed us to meet with Frank Baur, the company’s Executive Vice President for Operational Excellence, with whom we had an insightful conversation.
What do you see as the key trends in the financial services industry right now?
Financial institutions (FIs) are increasingly interested in leveraging AI to enhance and personalize the customer experience, improve risk assessments and drive operational efficiencies. Environmental, Social and Governance considerations play an increasingly central role in how banks operate and develop new products and services. Finally, digital transformation remains a top priority. Diebold Nixdorf is deeply involved in this effort. Our solutions empower FIs to bridge the gap between digital and physical banking wherever an ATM is deployed.
Can you provide an overview of what Diebold Nixdorf delivers from a service perspective?
Diebold Nixdorf offers a comprehensive services portfolio that covers all key ATM management functions. This starts with the installation of new devices or upgrades for those already in operation. Our availability management services encompass all types of repairs required during a device’s lifecycle, with remote monitoring and automated incident resolution to minimize downtime and improve efficiency. We provide cash management services to ensure optimal cash availability, using advanced forecasting and analytics to determine replenishment needs. Our global surveillance operations and ATM protection services safeguard against a wide range of threats, including cyberattacks, ensuring that financial institutions can operate with confidence.
What are the key drivers behind your decision to invest in and expand your service offerings, and how do market demand and technological advances influence this strategy?
The ATM channel has become increasingly strategic for banks, serving as a key enabler to migrate transactions away from tellers and transform branches into true advisory hubs. To support this shift, FIs need an ATM network that is highperforming, cost-effective, and secure while also compliant with an ever-changing regulatory landscape. We continuously develop new solutions that enhance service quality and efficiency by leveraging advanced software, automation, and industry best practices. By staying ahead of industry demands, we help our customers optimize their ATM networks while ensuring seamless operations.
How have shifting client expectations impacted Diebold Nixdorf’s approach to service delivery?
Traditionally, banks have run their ATM network with in-house resources, but the complexity and technology required to operate the channel have increased dramatically over the years. They are now looking at outsourcing many or all aspects of the operations. Our solutions ensure a seamless transition from an internal operating model to a managed service one and are easily scalable. We simplify ATM operations while ensuring our customers maximize the return from their ATM channel. Today, we serve over 1,000 FIs worldwide while providing them with full transparency and all the insights they need to optimize their strategy and its execution.
Does having a global service framework still allow you to deliver relevant local services?
Our global service framework is the foundation of our service model and ensures we can provide consistent service quality across all markets while allowing for necessary local adaptations. We operate one streamlined incident management process, leveraging a single global IT infrastructure worldwide. This means that any DN employee can leverage the same practices and tools. Our technical and operational trainings are also standardized: content and methods are the same wherever they are held, while customizations are obviously added to suit the local environments. Our hiring and talent development strategies also attract and retain the best professionals in each market. We balance global consistency and local relevance, so our customers receive the highest level of service everywhere.
What developments or enhancements have you integrated into your service offerings, particularly in light of technological advances such as automation and AI?
Our services are powered by a data intelligence platform, allowing us to shift our service model to truly datadriven and pro-active. The platform builds on a unique combination of decades of servicing experience, a continuously augmented knowledge base, and the application of cloud computing, machine-learning technologies, and AI. It leverages real-time, Internet of Things (IoT) connections from deployed devices, continually analyzing data collected, identifying and tracking patterns. The outcome is that incidents are resolved faster, with industryleading first-time fix rates, and some impending failures are detected and fixed before they occur. Ultimately maximizing end-user availability.
What are the effects of your managed and remote services on operational efficiency and customer experience in banking?
Our customers streamline in-house resources by outsourcing some or all of the key ATM management functions. They don’t need to build, maintain, and continuously upskill teams of experts. They also reduce investments and upkeep costs for expensive infrastructures and management tools. They gain from economies of scale and more cost-efficient channel management. They partner with an expert, which can ensure their ATM channel delivers market-leading end-user service availability and is protected from classic or emerging security attacks. High availability and security are the foundations for a compelling user experience, which leads to increased device usage, greater customer satisfaction, and more revenue for financial institutions.
What strategies have you implemented to ensure your workforce stays at the forefront of digital service innovation, particularly as technological advancements continue to reshape the industry?
Ensuring our teams operate efficiently and effectively while focusing on the quality of the services delivered to our customers is a key priority for Diebold Nixdorf. Whenever a device fails, our support desk agents have access to recommendations from our data intelligence platform on how the incident can be fixed, potentially adding preventative tasks to avoid potential future outages. This, combined with a simplified and streamlined process for parts ordering, tracking and checking stock availability, allows productive on-site technician visits. Technicians are equipped with mobile devices where they access actionable insights and instructions, always ensuring a timely intervention.
How do your service innovations align with evolving industry standards and regulatory requirements?
Ensuring compliance with industry standards and regulations is at the core of our service operations and any innovation we introduce. The infrastructure, systems, software applications and processes underpinning our services constantly adhere to the highest security and regulatory standards. Compliance is embedded into every aspect of our service offerings, ensuring financial institutions meet all necessary regulatory requirements.
With digital continuing to evolve, how do your service offerings compare in terms of reliability, scalability, and integration with digital?
As digital banking continues to evolve, FIs must regularly adapt their ATM services and user experiences to meet changing consumer expectations. However, legacy systems often make these updates complex, timeconsuming, and costly. Our technology is designed to help banks by providing greater flexibility, scalability, and security. With our solutions, FIs can introduce new transaction types, integrate mobile-first experiences, and connect seamlessly with third-party service providers. They can accelerate innovation, reduce costs, and enhance customer experiences while ensuring high availability, regulatory compliance, and advanced data security.
What are the next steps in your service development roadmap?
Our roadmap is driven by continuous improvement and ensuring our customers maximize the effectiveness and cost-efficiency of their ATM channel and branch network. We are developing new data-driven solutions that further leverage AI and automation and partnering with other high-tech companies. As FIs continue to downsize their branch network and opt for smaller footprints, they need to rely on a strong self-service channel. We are preparing for the launch of solutions that will further expand the scope of transactions at the ATM, including complex interactions that can be conducted only with a teller today. We are also addressing the needs of FIs who pool their ATM network with other FIs, enhancing the technology enabling this new business and operating model. The ultimate target is to be and remain industry leading.
Frank Baur Executive Vice President for Operational Excellence, Diebold Nixdorf
The hidden costs of the IT skills gap for UK financial services
The financial services sector has historically had a complex relationship with the new technologies. While many organisations have traditionally focused on front-end, customer-facing products, the back-office systems that actually drive critical operations have often been less prioritised. This imbalance has left financial institutions struggling to keep pace with the rapidly evolving digital landscape, making it harder to retain top IT talent. Skilled professionals often choose industries that offer more opportunities to work with cutting-edge technology, exacerbating the talent drain.
The growing IT and tech skills gap in the UK market further intensifies this challenge. For years, the UK has faced a significant shortage of highly skilled IT professionals. This lack of talent makes financial institutions even less appealing to tech professionals, who are in high demand these days. As a result, these institutions scramble to fill critical roles, such as cloud computing and cybersecurity, while facing stiff competition from other sectors, particularly larger tech corporations that offer attractive salaries and innovationfocused environments.
These factors together represent the hidden costs to organisations, with the consequences of the talent shortage going far beyond rising salaries and recruitment challenges. They are quietly undermining operational efficiency, compromising cybersecurity and stifling innovation, ultimately threatening the long-term competitiveness and resilience of the entire business and impacting the sector as a whole. In this article, we explore the three most significant hidden costs this situation is imposing on the UK financial services industry and outline actionable strategies to effectively address and mitigate these challenges.
Infrastructure outages and downtime
A shortage of skilled IT staff increases the risk of operational disruptions, including system outages and downtime. Research indicates that 20% of businesses have experienced outages and data breaches due to inadequate staffing. That translates to lost productivity, delayed service delivery, and ultimately, damage to customer trust and retention.
The impact of downtime is often more pronounced for larger enterprises, but any size and type of financial organisation should be concerned about downtime. Following the CrowdStrike incident earlier this year, the UK's financial watchdog has urged firms to strengthen their defences against major tech disruptions. Firms must prove their resilience to such events this year, further intensifying the fight for skilled cloud talent.
Security vulnerabilities
With cyber threats becoming increasingly sophisticated, inadequately trained or lacking staff, security teams need help to keep pace. Critical vulnerabilities may go unaddressed, leaving businesses exposed to potentially devastating breaches. This is exacerbated by the increasing complexity of IT systems, with the rise of cloud computing, mobile banking, and the Internet of Things (IoT) expanding the potential attack surface.
Without sufficient expertise, financial services organisations may struggle to implement robust security protocols, monitor for threats effectively, and respond swiftly to incidents.
This is particularly concerning for the financial services sector, which handles vast amounts of highly sensitive customer data. A report by RPC revealed a staggering threefold increase in cybersecurity breaches reported by financial services firms to the Information Commissioner's Office (ICO) over the last couple of years. This surge underscores the escalating threat posed by cybercriminals to the sector, highlighting the urgent need for robust cybersecurity measures.
This incident highlighted the severe consequences of inadequate security expertise in the financial sector, including regulatory fines, legal action, and irreparable damage to reputation. Moreover, security breaches erode customer trust, leading to loss of business and long-term reputational damage.
Stifled innovation
The skills gap hinders the adoption of new technologies, impacting competitiveness and customer experience. Overburdened and under-skilled teams may struggle to respond effectively to customer needs and market shifts.
This can lead to a decline in service quality and an inability to offer personalised solutions, further eroding customer satisfaction. Furthermore, lacking skills in emerging areas like artificial intelligence, machine learning, and blockchain can prevent financial institutions from capitalising on new opportunities and developing innovative products and services.
This inability to innovate can put companies at a competitive disadvantage as customers increasingly expect personalised, seamless, and digitally-driven experiences. Ultimately, falling behind in technological adoption can limit growth potential and hinder long-term success in a rapidly evolving market.
Solution: strategies for financial institutions
To mitigate these hidden costs, financial services organisations must adopt a multi-pronged approach. This includes partnering with Managed Service Providers (MSPs) who offer specialist expertise in areas like security, infrastructure management, and helpdesk support.
MSPs can also help upskill existing staff, enabling financial institutions to build internal expertise and manage increasingly complex IT systems. With 52% of companies settling for less-qualified hires due to talent scarcity, MSP-led training offers a practical solution for developing existing employees.
Furthermore, attracting and retaining talent is crucial. While large enterprises will be using salary to entice talent, smaller financial institutions can win at the junior level by emphasising professional development, growth opportunities, and a positive company culture. Offering stability and opportunities for meaningful work can be particularly appealing to younger generations. To manage budget constraints, smaller and medium-sized financial organisations can consider outsourcing specialised functions and strategically building internal expertise as they grow.
Finally, promoting diversity and inclusion widens the talent pool, bringing fresh perspectives and skills to drive innovation. A McKinsey & Company report highlights a significant diversity gap in the leadership of the financial services sector. The report reveals that women hold a mere 12% of senior positions, while Black and minority ethnic (BME) individuals occupy only 6% of these roles. These figures underscore the need for greater diversity and inclusion within the industry. The financial services sector must catch up, particularly in technology roles, and create an inclusive culture that can attract underrepresented groups and help address the talent shortage.
By addressing the IT skills gap proactively, financial services companies can avoid the hidden costs and position themselves for future success in an increasingly technology-driven world.
Charlotte Webb Operations Director, Hyve Managed Hosting
ESG Investing at a Turning Point: Growth, Regulation, and Real-World Impact
Once viewed as a niche segment of the market, sustainable finance has emerged as a driving force behind global investment strategies. Supported by policy shifts, rising investor demand, and growing awareness of environmental and social risks, ESG investing is entering a phase of rapid expansion. According to a recent report by IMARC Group, the global sustainable finance market reached USD 6.3 trillion in 2024 and is projected to grow to USD 27.9 trillion by 2033, with a compound annual growth rate of 17.06%.
This growth signals a structural shift in capital allocation, where long-term value increasingly aligns with positive environmental and social outcomes. ESG principles are no longer a peripheral consideration but shape core financial decisions across markets and asset classes.
The Current State of ESG Markets
Despite macroeconomic uncertainty, the sustainable finance sector demonstrates resilience and maturity. According to Moody’s ESG Outlook, global sustainable bond issuance is expected to maintain its trillion-dollar trajectory through 2025, underscoring steady investor demand and deepening market integration.
ESG investing is no longer seen purely as a values-driven approach. It is increasingly viewed as a framework for identifying material risks and opportunities. As highlighted by the CFA Institute, incorporating ESG considerations enables asset owners, lenders, and managers to redirect capital toward investments with measurable environmental and social benefits. This shift is helping to reinforce a feedback loop—where investment decisions influence corporate behavior, which in turn enhances long-term financial and societal outcomes.
Key Trends Shaping the Future
Regulatory Evolution
As ESG investing becomes more integrated into mainstream financial markets, regulators are moving to define clearer disclosure standards. In Europe, the Corporate Sustainability Reporting Directive (CSRD) is reshaping expectations by requiring large companies—and some nonEU entities with operations in Europe—to publish detailed sustainability reports. While the directive may offer exemptions for certain U.S.-based firms, its influence is widely regarded as a global benchmark in ESG reporting.
The Securities and Exchange Commission (SEC) has proposed mandatory climate-related disclosures for public companies, covering emissions data, climate risk management, and governance structures in the United States. Regulators also increase enforcement activity around ESG misstatements, signaling a shift from voluntary guidance to legal accountability.
Together, these developments are ushering in a new era of ESG oversight—where transparency is no longer optional, and alignment with emerging global frameworks is becoming a strategic imperative for financial institutions and corporations.
Data and Transparency
As ESG investing matures, data quality and consistency have become critical to risk management and capital allocation. Financial institutions are under increasing pressure to demonstrate ESG alignment and measurable outcomes. According to Snowflake, banks and financial institutions that embed ESG factors into their operations are better positioned to identify emerging risks and uncover new opportunities. However, doing so effectively requires robust data architecture, seamless access to third-party ESG data, and scalable analytics capabilities.
A growing number of institutions are investing in tools that improve data transparency across the ESG value chain—from supply chain disclosures to carbon accounting. The lack of standardization across jurisdictions remains a challenge. Still, innovations in cloud-based platforms and ESGspecific data frameworks are helping to close the gap between regulatory expectations and operational readiness.
Market Innovation
The sustainable finance market continues to evolve, driven by the growing need for instruments that link financing terms to measurable ESG performance. Beyond traditional green bonds, financial institutions increasingly deploy sustainability-linked loans, transition finance, and other performance-based mechanisms to incentivize responsible corporate behavior.
In 2024 alone, the sustainable loan market reached €907 billion globally, underscoring the shift from niche offerings to mainstream financial products. This growth reflects rising demand from borrowers and lenders for financing structures that align with ESG outcomes—whether tied to emissions reduction targets, diversity metrics, or renewable energy goals.
As innovation accelerates, market participants are exploring more dynamic and forward-looking models of sustainable finance, linking capital to current performance, transitional efforts, and longterm impact trajectories.
Challenges and Obstacles
While the expansion of ESG investing has opened new avenues for innovation, it has also revealed significant structural and strategic challenges. As the market matures, issues around standardization, credibility, and political consensus are becoming more pronounced—testing the industry’s ability to maintain momentum and integrity.
Standardization Issues
One of the most persistent challenges in ESG investing is the lack of consistent standards for measurement and reporting. Despite the widespread adoption of ESG principles, there is still no universally accepted framework for assessing corporate performance across environmental, social, and governance dimensions. As a result, investors often rely on a patchwork of rating agencies, disclosure guidelines, and proprietary scoring models—many of which produce conflicting results.
This fragmentation creates barriers to meaningful comparison across industries and geographies. It also exposes market participants to the risk of making misinformed decisions based on incomplete or noncomparable data. While efforts by international bodies such as the ISSB and EFRAG aim to create more cohesive standards, convergence remains a work in progress.
Greenwashing Concerns
As ESG investing gains prominence, regulatory bodies worldwide are intensifying their focus on greenwashing, where companies misrepresent their environmental practices or the sustainability of their products. In the United States, the Federal Trade Commission (FTC) has updated its Green Guides to strengthen requirements for environmental marketing claims. Similarly, the United Kingdom’s Competition and Markets Authority introduced the Green Claims Code to ensure that environmental messaging is clear, accurate, and substantiated.
In Australia, courts recently imposed a significant penalty on a financial institution for misleading ESG statements, illustrating the legal consequences of unverifiable claims. Meanwhile, the European Union is moving forward with its proposed Green Claims Directive, which aims to reduce greenwashing by requiring companies to back environmental claims with scientific evidence.
These developments underscore a broader shift toward accountability. As regulators adopt a more aggressive stance, financial institutions and corporations must ensure that sustainability-related disclosures are ambitious, credible, and verifiable.
Political Headwinds
As ESG regulations gain traction globally, concerns are mounting over the extraterritorial implications of emerging frameworks—particularly those originating from the European Union. The EU’s proposed Corporate Sustainability Due Diligence Directive (CSDDD) seeks to hold companies accountable for ESG violations across their global operations and mandates the development of climate transition plans.
However, the directive has drawn criticism from some U.S. business groups and political leaders, who argue that such measures could impose unwarranted regulatory burdens on American companies operating within the EU. These concerns reflect broader tensions around the global alignment of ESG standards and the balance between regulatory ambition and national sovereignty.
The growing divergence between regional ESG expectations underscores the complexity facing multinational corporations. As sustainability regulations expand in scope and enforcement, businesses must navigate compliance requirements and geopolitical sensitivities that may influence future policy coordination.
The Path Forward
Despite the complexity and growing pains within the ESG landscape, the path forward is one of continued evolution. Investors, regulators, and institutions are working to close existing gaps and build a more accountable, transparent, and impactful ESG ecosystem. Several key focus areas are emerging that will shape the next phase of sustainable finance—driven by innovation, collaboration, and a sharpened emphasis on outcomes.
Enhanced Technology Integration
As ESG investing becomes more data-intensive, technology plays a central role in improving transparency, measurement, and decisionmaking. Financial institutions are increasingly adopting advanced tools—ranging from AIpowered analytics to cloud-based platforms—to manage vast amounts of ESG-related data and assess portfolio-level risks and opportunities.
Technologies such as natural language processing are being used to extract ESG insights from corporate disclosures. At the same time, blockchain is being explored to enhance traceability in supply chains and improve the auditability of ESG claims. As the demand for consistent and verifiable data grows, digital infrastructure will be key to scaling ESG strategies across markets.
Regulatory Harmonization
The European Union is moving toward greater alignment in sustainability reporting through the introduction of the Omnibus ESG Regulation, set for implementation in 2025. This regulation seeks to consolidate key ESG directives, including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy Regulation, into a more cohesive framework.
The goal is to reduce reporting complexity while maintaining high standards of disclosure. While many businesses welcome the simplification, some critics have raised concerns that easing data requirements and delaying reporting timelines could dilute the rigor of ESG reporting.
For instance, proposed changes would postpone reporting obligations for large EU companies to 2028 for the 2027 financial year. Removing sector-specific standards in favor of broader reporting requirements has also sparked debate about how effectively industry-specific risks will be captured.
Focus on Impact Measurement
As ESG integration deepens, investors are placing greater emphasis on measuring the tangible impact of their investments. Tracking outcomes such as emissions reductions, job creation, or supply chain resilience is becoming central to ESG strategy. This shift is prompting firms to refine their metrics, align with global reporting frameworks, and enhance their capacity to report on financial and nonfinancial performance.
As demand for greater accountability continues to grow, impact measurement is likely to become a cornerstone of ESG investing—helping differentiate credible strategies from marketingdriven claims.
Looking Ahead
With the sustainable finance market projected to reach $2.58 trillion by 2030, the momentum behind ESG investing shows no signs of slowing. What began as a values-driven initiative has evolved into a sophisticated and data-centric approach to capital allocation that reshapes markets, regulatory frameworks, and investor expectations alike.
The challenge for institutions is no longer whether to integrate ESG factors but how to do so effectively and credibly in an environment of heightened scrutiny and regulatory complexity. Success will depend on combining transparency, impact, and innovation—supported by measurable results and long-term strategy.
As the ESG landscape matures, those who can navigate its evolving demands with clarity and commitment will be best positioned to deliver sustained performance and meaningful value creation.
Building Lasting Business Relationships: The Foundation of Sustainable Success
No matter the industry, strong relationships are at the heart of sustainable business success. Companies that prioritize trust and collaboration gain a clear advantage— especially in times of change.
Organizations that prioritize relationship-building don’t just survive in competitive environments—they thrive. When cultivated with care, business relationships foster trust, unlock collaboration, and create opportunities that would otherwise remain out of reach. In this article, we explore why relationship-building is more critical than ever—and how the most successful companies are making it a strategic priority.
The Power of Partnership
Strong business partnerships don’t happen by accident— they require ongoing attention, clear communication, and shared goals. The ability to manage partnerships effectively can give companies a competitive edge.
Recent research from McKinsey shows that organizations that prioritize partnership management consistently outperform others— not just financially, but in how quickly they adapt and innovate. What sets these companies apart is their focus on building alignment, setting up clear processes, and keeping communication open throughout the relationship.
Much of this success comes down to what experts call relationship capital—the trust, shared experience, and mutual understanding built over time. This becomes especially valuable during challenging periods, when strong relationships can help companies work through uncertainty and respond to change together.
Building Strong Supplier Relationships
Suppliers play a far more important role than simply delivering materials—they can be key drivers of innovation, efficiency, and long-term competitiveness. Organizations that view their suppliers as strategic partners, rather than just vendors, tend to reap broader benefits across the value chain.
A study published in the International Journal of Operations & Production Management found that companies with strong supplier relationships experienced not only cost reductions, but also significant gains in innovation and market responsiveness. These relationships allow businesses to collaborate more closely, share insights, and respond quickly to shifts in demand or disruption.
Consider Toyota’s approach. Rather than pursuing short-term savings, Toyota builds long-term, trust-based relationships with its suppliers. The company invests in joint development, regularly hosts technical sessions to exchange ideas, and maintains senior-level engagement to align on shared goals. These practices have helped Toyota develop one of the most adaptive and forward-thinking supply chains in the automotive industry.
The Client Connection
In business, long-term client relationships often deliver more sustainable value than constantly chasing new ones. As Harvard Business Review highlights, companies that take a strategic, long-term view of their customer relationships—especially in markets with high switching costs—are more likely to earn ongoing loyalty and deeper engagement over time.
A compelling example comes from the banking sector. According to a PwC case study, a leading bank implemented targeted customer retention initiatives that led to a 30% improvement in campaign effectiveness and helped preserve more than $30 million in customer value annually. These results underscore how strategic investments in customer relationships can generate long-term returns that far outweigh the cost of acquisition.
The Partner Perspective
Strategic partnerships can accelerate growth, expand market reach, and unlock new capabilities—but they don’t succeed on goodwill alone. High-performing alliances are built on clear goals, structured collaboration, and mutual trust. As partnerships move from formation through operation and evolution, alignment and communication remain essential at every stage.
One standout example is the Starbucks–Nestlé Global Coffee Alliance. Formed in 2018, the partnership allowed Nestlé to market and distribute Starbucksbranded consumer products worldwide. By combining Starbucks' brand strength with Nestlé’s distribution power, the alliance has expanded into nearly 80 markets and generated over $1.6 billion in incremental sales for Nestlé by 2022. Their success underscores the value of aligning complementary strengths and investing in longterm collaboration.
Technology's Role in Relationship Management
Technology has revolutionized how companies manage business relationships—but its greatest impact comes when it enhances, rather than replaces, personal connection. CRM (Customer Relationship Management) and SRM (Supplier Relationship Management) systems allow organizations to centralize data, monitor interactions, and act on insights—enabling better service, timely responses, and personalized engagement at scale.
A standout example is Netflix’s CRM strategy, which uses data analytics to understand viewer behavior and predict future preferences. The platform’s ability to deliver highly personalized content recommendations is powered by back-end systems that track user interactions in real time. But Netflix’s success goes beyond algorithms—it’s their responsiveness to customer experience and ability to act on those insights that drives long-term engagement and loyalty.
Used wisely, technology strengthens business relationships by enabling smarter, more informed interactions. But the core ingredients—trust, consistency, and genuine value—still depend on the human side of the equation.
Building Trust in the Digital Age
Trust remains the foundation of strong business relationships—but in today’s digital-first world, earning and maintaining that trust requires a new level of consistency and transparency. As CMSWire notes, successful organizations build trust by being clear about how they collect and use data, delivering consistent experiences across channels, and communicating with authenticity.
In the absence of regular in-person interaction, digital communication must be purposeful and humancentered. Tailored messaging, proactive service, and honest feedback loops all help foster credibility and connection—even through screens. While technology can facilitate communication, it’s the quality of the interaction that truly builds trust over time.
The Future of Business Relationships
As the business landscape evolves, so too does the way relationships are built and maintained. Emerging technologies like artificial intelligence, real-time analytics, and automation are transforming how companies communicate and collaborate—but the foundation of trust remains just as critical.
The COVID-19 pandemic served as a defining moment for many organizations, testing their ability to communicate clearly, respond empathetically, and prioritize people over process. According to the Financial Times, businesses that supported their employees and customers through disruption—by emphasizing mental health, well-being, and transparency—emerged with stronger bonds and greater loyalty.
Looking forward, sustainability and shared values will play an even greater role in shaping partnerships. Companies are being held accountable not only for their own impact, but also for the behavior of their suppliers and collaborators. Environmental, social, and governance (ESG) alignment is becoming a key consideration in forming long-term, resilient business relationships.
The Relationship Advantage
Strong business relationships aren't built overnight—they take time, effort, and genuine commitment. But the rewards are significant: greater resilience, stronger innovation, and lasting competitive advantage. The most successful organizations understand that relationships aren't just a means to an end— they’re central to long-term success.
The key is to approach each relationship with authenticity, a shared sense of purpose, and a long-term view. In an environment where business conditions can shift quickly, strong relationships provide the stability and trust needed to grow sustainably.
Like any meaningful connection, business relationships thrive on trust, clear communication, and mutual respect. By consistently investing in these fundamentals, you create a network that can weather uncertainty—and help your business grow in any season.
Business Insurance 101: What Every Company Needs to Know
Running a business means taking calculated risks—but some risks are too costly to ignore. Business insurance provides critical protection against events that could otherwise derail your operations, from lawsuits and property damage to cyberattacks and employee injuries. While it may not be the most glamorous part of entrepreneurship, having the right coverage can be the difference between recovery and ruin when the unexpected strikes. Here, we break down the essentials of business insurance, helping you understand what coverage you need, why it matters, and how to make informed decisions to protect your enterprise.
The State of Business Insurance
Before exploring specific policies, it's crucial to understand the broader landscape of business insurance. The commercial insurance market continues to expand, with global premiums expected to reach $933.91 billion by the end of 2024, according to PropertyCasualty360. This growth underscores insurance's increasingly critical role in helping businesses navigate uncertainty—from economic volatility to natural disasters. This understanding should make you feel more informed and prepared for the future.
As noted in Deloitte's Insurance Industry Outlook, premiums are also rising steadily, with a projected 3.3% increase in 2024. The upward trend reflects various factors: inflationary pressures, labor shortages, more frequent extreme weather events, and the rising costs of litigation and data breaches. These shifts are prompting insurers to reassess risk models and pricing strategies.
At the same time, insurers are adapting by offering more customized coverage, incorporating digital tools for faster claims processing, and partnering with clients on proactive risk management strategies. The result is a more dynamic marketplace where businesses are expected to play a more active role in shaping their risk profiles and managing costs.
Why Your Business Needs Insurance
Think of business insurance as your company's immune system. Just as the body requires different types of immune responses to fight off various threats, businesses need a range of insurance policies to protect against legal liabilities, physical damage, employee injuries, and digital threats. Here's why business insurance isn't just a smart idea—it's essential.
Legal Requirements
In many cases, insurance isn't optional—it's required by law. For example, most U.S. states mandate that businesses with employees carry workers' compensation insurance, which covers medical expenses and lost wages for job-related injuries. Some states also require unemployment insurance and commercial auto coverage, depending on the nature of the business.
Failing to maintain required policies can result in fines, legal action, license suspensions, or criminal charges. According to The Hartford, business owners should verify which insurance types are mandatory in their state to remain compliant and avoid costly penalties.
Financial Protection
Beyond legal compliance, business insurance provides a critical safety net. One lawsuit, natural disaster, theft, or cyberattack could financially derail your business. Insurance offers a buffer against these risks, ensuring your operations can continue despite unexpected setbacks.
Encouragingly, proactive risk management can also lower your premiums. For instance, companies implementing strong cybersecurity protocols have seen cyber insurance premiums drop by up to 20%, according to SmartFinancial. This illustrates how investing in prevention—whether through safety training, digital security, or robust documentation—can directly impact your bottom line.
Credibility and Client Assurance
Insurance doesn't just protect you—it builds trust. Many clients, vendors, and landlords require proof of insurance before entering into agreements. For example, landlords may request property insurance, and clients might expect evidence of general or professional liability coverage before signing a service contract.
Having the right policies in place signals that your business is legitimate, responsible, and prepared. This enhances your professional reputation and helps you secure partnerships more easily.
Essential Types of Business Insurance
There's no universal insurance policy that fits every business. Depending on your industry, location, and operations, you may need multiple insurance types to protect your company fully. Below is a comprehensive overview of essential coverages to consider:
1. General Liability Insurance
General Liability Insurance provides coverage against claims of bodily injury, property damage, and advertising injury. This foundational policy is crucial for most businesses, safeguarding against common liabilities. The general liability insurance market stabilized in 2024, with most premiums rising between 4% and 5%.
2. Professional Liability Insurance
Also known as Errors and Omissions (E&O) insurance, this coverage protects service-based businesses from claims of negligence or failure to perform their professional duties. It's especially crucial for consultants, lawyers, accountants, and other professional service providers.
3. Property Insurance
Property Insurance covers physical assets like buildings, equipment, and inventory from perils such as fire, theft, and natural disasters. This insurance ensures the continuity of operations by compensating for property losses. Notably, data breach protection has become a standard feature in many property insurance policies, reflecting the growing importance of cybersecurity.
4. Workers' Compensation Insurance
This insurance, which is required in most states, provides medical benefits and wage replacement to employees injured on the job and protects employers from potential lawsuits. The U.S. Small Business Administration notes that the federal government requires businesses with employees to carry workers' compensation, unemployment, and disability insurance; state-specific requirements may go further.
5. Business Interruption Insurance
Assists in replacing lost income and covering expenses when a business cannot operate due to a covered event, such as a natural disaster. This coverage is essential for maintaining financial stability during unexpected closures.
6. Commercial Auto Insurance
This policy covers liabilities arising from accidents, essential for businesses that own or use vehicles for operations, including bodily injury and property damage. It ensures that company vehicles are adequately protected.
7. Cyber Liability Insurance
With the increasing prevalence of cyber threats, this insurance protects against financial losses resulting from data breaches, cyberattacks, and other digital risks. Coverage often includes legal fees, notification costs, and credit monitoring for affected individuals.
8. Umbrella Insurance (Excess Liability)
Provides additional liability coverage beyond the limits of existing policies, offering an extra layer of protection against large claims or lawsuits that could exceed standard policy limits.
9. Directors and Officers (D&O) Insurance
Protects the personal assets of corporate directors and officers in the event they are sued for alleged wrongful acts in managing the company. This coverage is crucial for attracting and retaining qualified executives.
EPLI covers businesses against employee claims alleging discrimination, harassment, wrongful termination, or other employment-related issues. As workplace regulations evolve, EPLI becomes increasingly important.
11. Product Liability Insurance
Offers protection against claims arising from products that cause injury or harm. Businesses involved in manufacturing, distributing, or selling products should consider this coverage to mitigate potential legal and financial repercussions.
12. Trade Credit Insurance
Protects businesses against losses from non-payment of commercial debt, ensuring that accounts receivable are safeguarded even if a customer defaults due to insolvency or extended delays. This type of coverage enables companies to offer credit terms with confidence, helping support both domestic and international growth. According to Allianz Trade, trade credit insurance also provides valuable customer risk insights and can improve access to financing by strengthening a company's balance sheet.
While every business is different, these coverage types form the foundation of a strong risk management strategy. Once you've identified which policies your company needs, the next step is understanding what influences their cost—and how to manage those expenses effectively.
Understanding Insurance Costs
Business insurance costs can vary significantly depending on a number of factors. Understanding what drives these costs helps business owners make informed decisions, manage risks effectively, and potentially lower premiums over time.
Factors That Affect Insurance Costs:
• Industry and Risk Exposure: Businesses in higher-risk industries—such as construction, healthcare, or manufacturing— often face higher premiums due to the increased likelihood of claims.
• Business Size and Revenue: Larger companies with more revenue or assets generally require higher coverage limits, increasing insurance costs.
• Claims History: A history of frequent or high-value claims can lead insurers to view your business as high-risk, resulting in higher premiums.
• Location: Businesses in regions prone to natural disasters or high crime rates may face higher premiums. Severe weather events and natural disasters are happening more frequently, increasing the number of claims insurers must cover.
• Coverage Limits and Deductibles: Higher limits provide increased protection but come at a higher cost. Choosing a higher deductible may lower your premium but increase out-of-pocket expenses when filing a claim.
• Payroll and Employee Count: Workers' compensation and liability policies are directly affected by the number of employees and your overall payroll.
• Inflation and Labor Costs:Insurance rates change over time due to inflation, material costs, and labor shortages. In industries like construction, rising wages and difficulty sourcing skilled labor are driving up claims and rebuilding costs—ultimately impacting premiums.
• Supply Chain Issues:Supply chain disruptions and rising materials costs can extend recovery time after a loss, increasing business interruption costs.
• Litigation and Social Inflation: An increase in lawsuits and significant jury awards—known as social inflation—is driving up liability coverage costs across many sectors.
• Regulatory Changes:Shifts in the legal and regulatory environment can affect the availability or pricing of certain types of coverage, especially in industries with strict compliance requirements.
• Reinsurance Costs: Insurers rely on reinsurance to manage their own risk, and when reinsurance costs rise, insurers often pass those costs on to policyholders.
The good news? Commercial insurance rates are expected to ease compared to 2024, offering some relief after recent years of sharp increases. However, proactive risk management and regular policy reviews remain essential for keeping costs manageable over the long term.
Risk Management and Insurance
Intelligent risk management can lead to lower insurance premiums—and help you avoid costly disruptions in the first place. By proactively reducing risk, businesses can often negotiate better terms, qualify for discounts, and improve their insurability. Here are some essential strategies:
1. Regular Safety Training
2. Implement comprehensive workplace safety programs and conduct ongoing training to reduce accidents and claims. Insurers often reward companies that prioritize employee safety with lower premiums. According to Marsh McLennan Agency, a strong safety culture directly contributes to better insurance outcomes.
3. Cybersecurity Measures
4. Robust digital security protocols are no longer optional. Businesses that adopt practices like multifactor authentication, employee phishing training, and endpoint protection reduce their cyber risk and can also see significant savings on cyber insurance. As noted by UpGuard, insurers are increasingly rewarding companies that demonstrate good cyber hygiene.
5. Documentation Systems
6. Maintain detailed, up-to-date records of safety protocols, incident reports, and employee training. Clear documentation helps demonstrate your risk management efforts during audits or claims and may support more favorable policy terms. MRSC emphasizes that documentation is critical to any effective risk reduction strategy.
7. Regular Insurance Reviews
8. Your business evolves—and so should your insurance. Conduct annual reviews of your policies to ensure your coverage aligns with current risks, revenue, staff size, and operations. Regular updates can help close gaps, eliminate unnecessary coverage, and potentially reduce costs. KBI Insurance recommends using these reviews to avoid coverage blind spots and optimize your protection.
These risk management strategies improve your safety and position your business to adapt to a rapidly changing insurance landscape. That's where the next wave of innovation comes in.
Emerging Trends in Business Insurance
As risk factors evolve and technology continues to reshape the business world, the insurance industry is adapting in real-time. From smarter underwriting tools to climateconscious policies, the following trends are redefining how insurers assess risk, deliver coverage, and support their clients in an increasingly complex environment.
Digital Transformation
The insurance industry is undergoing significant transformations driven by digital innovation. Advancements such as artificial intelligence (AI), machine learning, and blockchain technology are revolutionizing various aspects of insurance operations, from underwriting and claims processing to customer engagement. These technologies enhance efficiency, accuracy, and personalization, enabling insurers to assess risks better and tailor coverage to individual business needs.
For instance, blockchain technology is transforming the financial services industry, especially in insurance, by enhancing efficiency, accuracy, and transparency. Blockchain provides a decentralized, secure ledger system where transaction records are stored in linked blocks and distributed across many computers (nodes), ensuring transparency and immutability. Integrating smart contracts on blockchain enables the automation of processes through programmable rules that self-execute upon verified conditions, reducing human error,cost, and increasing trust. One revolutionary application is parametric insurance, which uses smart contracts to automatically compensate policyholders based on event occurrence rather than damage assessment. Companies like Lemonade and Etherisc are pioneering this technology, with successful implementations such as drought insurance for Kenyan farmers and various parametric insurance products. Platforms like Nexus Mutual also use blockchain to pool insurance coverage, assessing claims through member consensus. The insurance industry's adoption of blockchain and smart contracts signifies a shift toward more efficient, secure, and streamlined operations, offering significant advantages over traditional methods and potentially leading to widespread changes in how insurance is managed and delivered.
As these technologies evolve, businesses can expect more customized and responsive insurance solutions that align closely with their unique risk profiles and coverage requirements.
Customized Coverage
Companies increasingly seek insurance solutions tailored to their unique risks and operational intricacies. Several factors drive this shift towards personalized policies:
• Advancements in Data Analytics and Artificial Intelligence: Insurers now leverage advanced technologies to analyze large volumes of data, enabling them to design policies that closely align with individual business needs. This approach enhances risk assessment and provides more accurate coverage options.
• Evolving Customer Expectations: Businesses expect more flexibility and customization in their insurance policies, desiring coverage that adapts to their specific circumstances and operational models. This demand has led insurers to offer more personalized and transparent insurance products.
• Emerging Risks: The rise of new challenges, such as cyber threats and extreme weather events, necessitates tailored insurance policies that address specific exposures.
By embracing customized coverage, businesses can secure insurance solutions that meet regulatory requirements and provide comprehensive protection aligned with their unique risk profiles.
Environmental Considerations
Climate change is no longer a distant concern—it's a real and escalating factor shaping the business insurance landscape. As the frequency and severity of extreme weather events increase, insurers are being forced to rethink how they assess and price risk.
One example: the 2025 Californian wildfires are projected to cost Lloyd's of London up to $2.3 billion, making it one of the costliest disasters in recent memory. These mounting losses are pushing insurers to adjust pricing models and limit exposure.
Premiums in climate-sensitive regions have risen sharply as insurers adjust pricing models to reflect growing risks, particularly in areas prone to wildfires, flooding, or hurricanes.
But property insurance isn't the only line of coverage affected. Climate-related stressors are also expected to impact liabilities for life and long-term care insurers, as changes in air quality, temperature, and disease patterns contribute to rising health risks.
In response, many insurers are withdrawing from high-exposure markets, raising premiums, and revising coverage terms. This evolving risk environment underscores the need for businesses to evaluate their geographic exposures and collaborate with insurers on proactive mitigation strategies.
Understanding how climate change is reshaping insurance availability and affordability allows businesses to plan ahead, ensuring their coverage remains adequate and accessible in the years to come.
Cyber Insurance Evolution
As cyber threats continue to escalate, the cyber insurance market is undergoing significant transformations to address emerging risks and provide more comprehensive coverage.
Market Growth and Stability
The cyber insurance market has experienced substantial growth; according to Munich Re, global cyber insurance premiums were estimated at approximately $14 billion in 2023, with projections indicating an increase to $29 billion by 2027. This expansion reflects the increasing recognition of cyber risks across industries and the corresponding demand for protective measures. In 2025, the market is expected to stabilize, offering competitive rates and ample capacity for businesses seeking coverage.
Emerging Threats and Coverage Adaptation
The evolving cyber threat landscape presents new challenges for insurers and policyholders alike. Notably, the rise of artificial intelligence (AI) has introduced sophisticated attack vectors, including AI-powered cyberattacks and deepfakes, which complicate risk assessment and mitigation efforts. Insurers are responding by refining underwriting processes and expanding policy terms to encompass these novel exposures.
Regulatory Developments
Regulatory changes are also influencing the cyber insurance domain. In the United States, the Department of Health and Human Services plans to introduce new HIPAA rules aimed at enhancing the protection of electronic health information. These developments underscore the necessity for businesses to stay informed about regulatory shifts in cybersecurity and ensure their cyber insurance policies remain compliant.
Risk Management and Policy Optimization
Businesses are encouraged to adopt proactive risk management strategies to navigate the complexities of the current cyber insurance landscape. This includes investing in robust cybersecurity measures, conducting regular policy audits, and collaborating with experienced brokers to tailor coverage to specific organizational needs. By integrating comprehensive risk management practices, companies can enhance their resilience against cyber threats and optimize their insurance coverage.
How to Choose the Right Insurance
1. Assess Your Risks
Start by identifying your business's vulnerabilities— liability exposure, cybersecurity gaps, or weather-related threats.
2. Research Providers
Look for insurers with experience in your industry and strong financial health. A provider's reputation for claims support can matter as much as the policy itself.
3. Compare Quotes
Request multiple quotes and compare beyond just the premium. Consider coverage limits, deductibles, and exclusions.
4. Read the Fine Print
Make sure you understand what's covered and what's not. Reviewing terms carefully helps avoid unpleasant surprises later.
5. Work with an Expert
Partnering with a licensed insurance broker can simplify the process. Brokers can help tailor policies and negotiate better terms for your specific needs.
The Future of Business Insurance
Despite recent challenges, the outlook for business insurance is optimistic. Nearly three-quarters of U.S. small business owners feel confident about their economic viability in 2025, signaling a strong environment for continued growth—and a demand for more adaptive insurance solutions.
As businesses evolve, so will their insurance needs. We're seeing a shift toward more flexible, modular policies that can scale with a company's operations. Advances in technology, such as AI-driven risk analysis and real-time underwriting, will enable insurers to deliver faster, more customized coverage. Embedded insurance—coverage offered directly at the point of sale or service—is also expected to gain traction, particularly in the e-commerce and fintech sectors.
Ultimately, business insurance isn't just another expense— it's a strategic investment in long-term resilience. The right coverage won't prevent bad things from happening, but it will ensure your business has the resources and support to recover when they do. By staying informed, managing risks proactively, and regularly reviewing your coverage, you can survive disruption and grow through it.
The Changing Landscape: How Consolidation Affects Small Community Banks
The American banking sector is experiencing rapid transformation, characterized by significant consolidation that is reshaping the landscape and profoundly affecting small community banks. Community banks, known for their close relationships within local communities and their central role in supporting local businesses and economies, now face growing pressures that threaten their independence and longestablished position as pillars of local financial stability.
Over the past two decades, consolidation driven by mergers and acquisitions (M&A) has accelerated significantly, fueled by the pursuit of greater scale, improved efficiency, and the necessity to keep pace with rapid technological advancements. Between 2003 and 2023, the number of community banks in the United States declined by approximately 46%, from 7,620 to 4,129, underscoring the urgency and magnitude of this trend.
While consolidation can offer benefits such as enhanced efficiency, broader financial services, and upgraded technological infrastructure, it also raises critical concerns regarding reduced access to personalized, relationship-driven banking services. These concerns are especially acute in rural communities and among small businesses, which rely heavily on the localized knowledge and tailored financial solutions traditionally provided by community banks.
Given the transformative nature of consolidation, it is essential to examine its driving forces, its varied impacts on local economies, and the adaptive strategies community banks are employing to navigate this evolving financial landscape.
The Current State of Consolidation
Despite their smaller scale relative to national and regional financial institutions, community banks remain critical to the U.S. economy, serving local businesses and individuals through relationship-focused banking practices. Community banks have demonstrated remarkable resilience, maintaining solid financial performance even amid rapid industry changes. As of the third quarter of 2024, these banks collectively achieved a 1.01% return on assets (ROA) and a 9.99% return on equity (ROE)—strong indicators of their continued ability to generate stable earnings despite significant competitive pressures and operational challenges.
Yet, pressures for consolidation remain persistent and continue to reshape the banking landscape. Regulatory complexities, increasing technological demands, and intensified competition from larger banks and fintech companies have created an environment in which smaller institutions face considerable difficulty competing independently. As a result, mergers and acquisitions have become increasingly common, steadily reducing the number of independently operated community banks across the country.
Some consolidations occur from necessity—such as financial instability, succession planning challenges, or the inability to achieve sufficient scale. Others are strategic, allowing community banks to achieve operational efficiencies, expand geographic footprints, and enhance their technological and service capabilities.
For many small community banks, consolidation is no longer a mere strategic option—it has become a necessary consideration for survival. With continued economic uncertainty, evolving consumer preferences, and intense competitive dynamics, maintaining profitability and meeting customer expectations is an increasingly challenging balancing act.
Key Drivers of Consolidation
Several key factors continue to drive small community banks toward consolidation, from technological advancements and regulatory pressures to competitive challenges from both traditional and emerging players. While some community banks proactively seek mergers as strategic growth opportunities, many others face significant operational pressures that make consolidation an essential survival strategy.
1. Technological Demands
The rapid digital transformation in banking has fundamentally reshaped consumer expectations. Today's customers expect seamless digital banking experiences, mobile payment capabilities, and robust cybersecurity protections, all of which demand significant and often costly investments in technological infrastructure. For many community banks, upgrading outdated systems while simultaneously meeting new digital compliance standards presents substantial financial hurdles. Consequently, smaller banks may opt to merge with larger institutions already equipped with advanced technological capabilities to better serve customers and remain competitive.
2. Regulatory Burden
The regulatory environment continues to influence merger and acquisition (M&A) activity, as compliance demands grow increasingly complex and resource-intensive. Stricter capital adequacy standards, extensive reporting requirements, and constantly evolving regulations around anti-money laundering (AML), cybersecurity, and consumer protection have significantly raised operational costs. Smaller institutions often find it challenging to manage these escalating expenses without jeopardizing profitability. To mitigate these burdens, many community banks choose mergers or acquisitions as a strategy to share compliance costs, leverage expanded resources, and streamline regulatory processes. Additionally, some banks explore alternative solutions, such as strategic partnerships or alliances, to address regulatory challenges while retaining their operational independence.
3. Competitive Pressures
Community banks face intensifying competition from larger financial institutions and emerging non-traditional players such as fintech companies. One of the most significant competitive challenges facing community banks today is deposit growth, with more than half (54%) of community bank executives identifying it as their biggest challenge. Larger banks typically possess stronger brand recognition, extensive physical branch networks, and advanced digital offerings, all of which make customer acquisition and retention increasingly difficult for smaller institutions. Additionally, fintech companies continue disrupting traditional banking models with innovative and accessible financial solutions, further exacerbating competition.
Given these pressures, community banks must carefully weigh their strategic choices, such as investing in technological modernization, forming beneficial partnerships, or considering mergers that offer improved financial stability and enhanced operational efficiencies. These decisions hold significant implications not only for the institutions themselves but also for the communities they support.
Impact on Local Communities
The consolidation of community banks significantly impacts local economies, especially in rural areas and small towns where these institutions historically serve as vital sources of financial stability and growth. While consolidation is often portrayed as necessary for modernization, some stakeholders express concerns about losing community banks that uniquely understand and address local financial needs.
1. Small Business Lending Gaps
Research has shown that when community banks merge or are acquired by non-local financial institutions, it can create notable local small business lending (SBL) gaps that may not be adequately addressed by remaining banks. This challenge is particularly pronounced in rural communities, where small businesses rely heavily on personalized, relationship-based lending practices. Larger acquiring banks often employ standardized credit assessment models, potentially limiting lending to businesses that don’t neatly align with traditional or automated risk profiles. As a result, critical financing needs in underserved communities can remain unmet, hindering local economic growth.
2. Shifts in Financial Services
Yet, contrary to common assumptions, other studies suggest that overall small business lending frequently increases when a community bank is acquired by a larger financial institution. Larger banks typically have more significant capital resources and diverse financial products, which can lead to expanded lending in certain markets. However, increased lending is not always evenly distributed across communities. While some regions may benefit from expanded lending activity, others— particularly more rural or economically vulnerable areas—might experience diminished access to flexible and relationshipdriven financial solutions traditionally provided by local banks.
3. Economic and Employment Effects
Beyond lending, the disappearance of a community bank can significantly affect local employment and economic activity. Bank consolidations often lead to branch closures, especially in areas where multiple locations overlap post-merger. These closures can result in job losses within the community, as local branch employees are displaced. Additionally, the reduction of physical banking locations disproportionately affects elderly customers who may face challenges adapting to digital banking platforms and rely heavily on in-person services. Studies have shown that branch closures are more prevalent in low-to-moderate income and minority communities, exacerbating economic disparities and reducing access to essential financial services.
4. Customer Relationships and Trust
Community banks distinguish themselves primarily through strong, long-term relationships built on personalized customer service and local community knowledge. When mergers occur, there is a tangible risk of eroding these personalized relationships. Customers accustomed to direct interaction with familiar local bankers might instead face less personal communication channels, such as centralized call centers or automated digital platforms. While technology-driven banking services provide convenience and efficiency, they do not fully replicate the interpersonal trust established over years of direct, relationship-based interactions.
Moving forward, the central challenge facing community banks and acquiring institutions is effectively balancing operational efficiency and technological upgrades with maintaining the community-oriented focus that has long defined local banking. The long-term success of these mergers will hinge upon their ability to sustain strong local relationships, ensure equitable lending, and support continued economic vitality in the communities they serve.
Adaptation and Survival Strategies
Facing consolidation pressures, many community banks are proactively adopting strategies to maintain their independence and enhance competitiveness. By leveraging core strengths such as personalized service and local expertise, these banks are navigating industry challenges effectively.
1. Strategic Partnerships
Community banks are increasingly forming alliances with fintech companies to modernize their offerings without the extensive costs of in-house development. These partnerships enable the integration of advanced technologies like digital banking platforms and person-to-person payment systems, enhancing customer experiences while preserving the banks' relationship-driven approach.
2. Specialization and Niche Markets
To differentiate themselves, some community banks are focusing on niche markets where they possess a competitive advantage. This includes serving specific industries such as agriculture, healthcare, or commercial real estate, and offering tailored financial products that meet the unique needs of these sectors. By positioning themselves as experts in particular areas, these banks attract and retain loyal customers.
3. Enhanced Digital Capabilities
Investing in digital transformation is essential for community banks aiming to meet evolving customer expectations. Many are upgrading online and mobile platforms, adopting AI tools, and enhancing cybersecurity to improve efficiency and customer satisfaction. These technological advancements allow banks to offer modern conveniences while maintaining personalized service.
4. Customer-Centric Innovation
Prioritizing customer experience, community banks are expanding financial education programs, offering personalized financial planning, and launching community-focused initiatives. These efforts reinforce their role as trusted financial partners and deepen customer loyalty. By engaging directly with their communities, these banks strengthen relationships and support local economic development.
These strategic approaches demonstrate how community banks are embracing innovation without compromising the core values that set them apart. In doing so, they are charting a path forward in an increasingly competitive and technology-driven financial landscape.
Looking Ahead
The future of community banking will depend largely on how successfully these institutions navigate the tension between preserving their local, relationship-driven identity and adapting to the demands of an increasingly digital and competitive financial environment.
While merger activity has recently shown some signs of slowing, largely due to rising interest rates, market uncertainty, and heightened regulatory scrutiny, many analysts believe the underlying drivers of consolidation remain strong. Factors such as the cost of technological upgrades, talent acquisition, and increasing compliance burdens continue to weigh heavily on smaller institutions, suggesting that consolidation is likely to continue in the medium to long term.
For those community banks seeking to remain independent, long-term success will hinge on embracing digital transformation, investing in specialized market niches, and doubling down on customer-centric innovation. Institutions that can modernize their operations while preserving the personal relationships that define community banking will be best positioned to thrive.
Ultimately, the evolving landscape presents both risks and opportunities. Community banks that approach change proactively—not reactively—can redefine their role in the modern banking ecosystem while continuing to serve as vital economic engines in their local communities.
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