The Path Forward for AI in Banking, HELOCs Opportunity Value, Effectiveness of Cash Bonus Offers, and Redefining What It Means to Be a “Primary” Financial Institution
GenAI is transforming banking by creating personalized customer experiences, stronger conversational assistants, and more efficient operations. Fintechs and other e-commerce players are moving faster than traditional banks, with potential impact on category share if customer experience falls behind a new standard.
Traditional & Regional Banks Are Behind on GenAI Adoption
Nearly half of US bank decision-makers implemented GenAI in their external and internal processes in 2025 (up from 10% in 2023). AI has begun to secure its foothold in the financial industry, thus far showing positive impact to internal operations and resulting in productivity gains, improved research capabilities, and stronger sales outcomes. Large leaders in the banking and finance industry have seen its value, with 68% of financial institutions worldwide reporting they expect payback on their GenAI investments within 2 years (with 14% of those already reporting seeing benefits within 4 months).
Achieving scalable systems is paramount, particularly for smaller financial institutions. Roles for GenAI need to be prioritized in order of recognizable value to the consumer. High-visibility strategies, such as personalized customer service or enhanced credit underwriting, can immediately enhance the online experience and accelerate processes. Banks are beginning to roll out more sophisticated online assistants that can understand and execute more advanced customer-driven questions and tasks. Positive experiences that feel personalized to each user are gradually becoming the standard for online banking.
For major Fintech or Tech players, however, tapping into Agentic AI — AI’s most autonomous, goal-oriented form yet — is beginning to create notable opportunities. Particularly, AI agents can make direct purchases through platforms and sellers, which in many scenarios can bypass bank networks and withhold them of online touchpoints with the consumer. Fintech and other payment providers that can establish themselves first in this space and create trusted partnerships with secure, AI-driven purchasing experiences could create a stronghold in this emerging commerce ecosystem. Due to regulatory challenges and slower tech adoption, it is estimated banks may still be 3+ years away from having customer-facing uses for Agentic AI and will be playing catch-up to the tech-driven services.
For banks, moving forward requires integrating with AI to drive personalized customer engagement. GenAI should become central to analyzing a breadth of customer data to drive conversational, data-supported recommendations to its customer base. Trust must be created in these systems. Communicating the availability of human support and commitments to data privacy is necessary to drive successful adoption. With Agentic AI still a few years away, long-term considerations should be taken to understand how to better integrate this new ecommerce journey into the FIs forecasts; however, focus on improving the online experience with current GenAI models can keep institutions moving towards the front of the pack in the rapidly evolving digital market.
Source: “Gen AI and Agentic AI in Banking 2025”
2025 was a notable year for HELOCs in the financial industry, given the notable amount of available home equity nationwide resulting from locked-in interest rates. While HELOCs can offer lower interest rates than many other lending services, they are still misunderstood. With the proper information and incentivized marketing, FIs can capitalize on these high-value lending options.
HELOCs Primed for a Strong 2025
In 2025, home equity has reached a record $29.3 trillion, influenced by rising home values and homeowners being “locked in” to their current homes due to high interest rates and limited housing supply. With 77% of homeowners holding mortgages at 6% or below, there is little incentive to sell in the current market and enter a less owner-friendly home agreement. Over 28.7 million Americans are in their first mortgage with over 20% equity in their home, making them prime candidates for a HELOC when additional capital is needed. Still, HELOCs remain widely underutilized, mostly because they are misunderstood as being complex compared to credit cards or personal loans, which often yield much higher interest.
Competition intensified in 2025, as nonbank lenders have altered customer expectations for speed and convenience. This shift pressures traditional FIs to update their HELOC processes using tools like automated valuation models (AVMs) to shorten appraisals and Remote Online Notarization (RON) to streamline closings. Consumers increasingly expect HELOCs to offer near instant preapprovals and fast access to funds. Lenders that can effectively streamline their approval process and UX can significantly strengthen their market position and improve conversion rates on HELOCs.
To fully capture the HELOC opportunity, financial institutions must pair operational improvements with data-driven marketing. Predictive models, trending credit data, and alternative datasets can aid lenders identifying borrowers likely to open a HELOC within one to four months. Effective marketing strategies include ongoing optimization of targeting and messaging, analyzing lost leads, and leveraging Advanced Intelligent Services (AIS) to pinpoint high-potential consumers. Lenders that invest in education and digital transformation are best positioned for HELOC growth in 2025.
Source: Experian: Why 2025 is the Year of the HELOC
Banks are increasingly using large cash bonus incentives — now as high as $1,500 — because they reliably attract new customers, and only about 12% leave immediately after receiving the bonus, meaning most remain to be profitable. Banks can win long-term value by following the bonus with fast digital onboarding, personalized product bundles, and strong cross-promoting, which converts these customers into primary relationships with far higher value.
Bonus Offers Work If Banks Work Them
Banks are increasingly using cash bonus incentives to increase member count and deposit volume as competition intensifies and consumers respond less to rate driven offers. Over the past decade, bonuses have risen from $200 to as high as $1,500 in 2024, fueled by large banks like Chase. These offers typically require opening a transaction account, meeting onboarding requirements, and maintaining a minimum balance for 90–120 days. While this frontload costs, these incentives do effectively capture users: 64% of Americans say bank bonuses influence their choice of where to open an account, reflecting a broad cultural erosion in FI loyalty in favor of rewards in the digital age.
Despite concerns of “bonus chasers” that will empty the account once terms are met and the bonus is received, real data shows that churn is manageable and lower than expected. SouthState and Banking+ analyses show that only about 12% of customers leave right after receiving their cash bonus. Importantly, 15% of bonus-motivated customers deliver above average long-term value; they are not uniformly unprofitable cohorts. Those who stay past the 90-day window tend to remain nearly 4 years on average, aligning with nonpromotional members. This retention rate is variable by bank but improves with positive brand strength and onboarding friction.
Profitability hinges on banks converting these new customers into primary relationships. Traditional banks that layer in thoughtful onboarding, such as bundled products, early cross sell of direct deposit, and debt engagement, see significantly improved account value and long-term account survivability. “Primary relationship” customers deposit 10× more than single product customers, making post-acquisition engagement far more important than the initial bonus step that brings customers in the door. Digital-first FIs are also raising expectations with goals of 3-minute digital account openings, strong personalization, and churn rates as low as 10.8%.
Mixing cash bonuses with high promotional interest rates is not recommended, as rate sensitive customers are often more costly and harder to model. The optimal strategy is to use the cash bonus to attract customers who are already inclined to switch banks, then deepen the relationship through digital onboarding, brand education, and personalized product recommendations. Ultimately, bonuses “get customers in the door,” but strategic onboarding, personalization, and cross-sell programs are what keep them from walking out.
Sources:
- Banking+: Strategies to Maximize CLV and Stop “Bonus Chasers”
- SouthState Correspondent: Why the $3,000 Cash Bonus Offer Makes Sense
Consumer loyalty to a single primary financial institution is weakening as people increasingly open multiple accounts and chase bonuses, with many already using their “main” checking account as a temporary passthrough rather than a true financial home base. In response, banks are redefining primacy around behavioral signals, such as income flows, digital engagement, and consistent usage, because customers who treat an institution as their functional hub generate far higher deposits, fee revenue, and long-term value.
Redefining Goal Measurement for Primary Financial Institutions
Customer loyalty to a primary financial institution is weakening as consumers increasingly open multiple accounts, chase promotional bonuses, and relocate funds between providers. While banks once treated new account volume as a key growth indicator, today many new relationships reflect rate-chasing behaviors rather than long-term loyalty. Research from J.D. Power shows that a majority of new checking, investment, and credit card accounts are now additional accounts rather than replacements. On top of that, many customers use their main checking account as a temporary “paycheck motel” before transferring funds elsewhere.
Gen Z and millennials routinely spread their financial lives across multiple institutions, choosing specialized providers for spending, saving, borrowing, and investing. As a result, “primary” status has shifted from account ownership to behavioral engagement. Banks now look for deeper user analytic patterns — income flows, transaction behavior, digital engagement, and sustained balance returns. Despite this fragmentation, identifying a new version of “primary status” remains financially meaningful. Customers who treat a bank as their primary institution generate ten times more deposits, eight times more fee revenue, and a healthier deposit mix than nonprimary customers. Seeking exclusivity is increasingly becoming a losing game, but FIs can still win by becoming a customer’s first choice for everyday financial activities.
For community banks and credit unions, the path forward lies in specialization and segment specific value. Rather than trying to own a consumer’s entire financial life, smaller institutions are targeting niches with tools that fit unique financial behaviors. Examples include banking products for freelancers and tailored mortgage products for first-time homebuyers. Ultimately, modern primacy is earned through repeated relevance and reliable daily interactions. FIs delivering convenience, support, and value can remain in a customer’s financial “home base” even if other providers are in the mix.
Source: The Financial Brand: Rethinking Primary Financial Institution Status as Customer Loyalties Fracture
For more information, visit harmelin.com, or connect with us on LinkedIn or Facebook.
