Innovation in bank technology is important for institutions of all sizes. While progress is often concentrated among the largest money center banks, this progress drives trends across infrastructure, operations, and the customer experience that are relevant to everyone. At the boardroom and senior management levels, executives need to understand this and decide how to react to those trends.

In particular, there are five categories to pay attention to as leaders plan for the next five years: next-generation infrastructure, including core modernization; artificial intelligence (AI) and automation; mobile banking and experience; blockchain technology; and enhanced ATM capabilities. Banks should also have a fintech partnership strategy.

Next-generation infrastructure. A microservices-enabled, API-native architecture and a transition to cloud-based core systems represents the future. However, modernizing legacy systems isn’t easy: Executives should think about implementing incremental upgrades and adopting best-in-class solutions over time. Modernization and core migration are journeys that depend on strategy, risk, and governance, and no matter what infrastructure choices you make, you should prioritize security and regulatory compliance.

AI, analytics, and automation. Robotic process automation has played a major role in operational efficiency for years, allowing employees to focus on strategy, but more advanced tools are emerging. AI has an important role to play in automating processes, particularly for repetitive tasks; enhancing customer service through chatbots; improving risk management; and analyzing large datasets for customer insights. Generative AI is the next frontier, but banks will need to keep a close eye on risk appetite and governance.

Mobile banking and customer experience. We’ve seen strong growth in mobile banking adoption, and it’s the only channel many younger consumers know. Naturally, these customers will expect seamless, modern, user-friendly experiences. That means, to stay relevant, it’s crucial for banks to invest in mobile app development and reevaluate the cost-effectiveness of other channels. Voice response units are an example of a legacy experience that isn’t particularly useful or user-friendly, but it’s still around.

Enhanced ATM capabilities. It’s time to modernize ATMs to offer more services, including video banking and advanced cash handling. Advanced ATMs reduce the need for physical branches, but they also serve a purpose as part of a defensive strategy when you have a location that doesn’t warrant staffing and can’t be offloaded. Customers still need cash, and the presence of a branch makes a difference in marketing to local customers. It’s even better when customers can still interact with human bank staff in a central location.

Blockchain. Blockchain was tied to crypto for years, but it’s now starting to find its own identity. As a standalone technology, it has the potential to revolutionize transaction processing and security. It could also streamline banking processes, improve the customer experience for real-time payments, reduce operational costs, ensure regulatory compliance, and support better identity verification. Smart contracts, which are based on a blockchain, make it easier to oversee and enforce agreements between parties.

Collaboration with fintechs. Successfully tackling technology trends, including those above, cannot be done alone. At least, not by many. That means bank leaders need to think about how to work with fintech vendors based on strategy, governance, and risk tolerance. Examples of how to collaborate with fintechs include forming strategic partnerships with fintech companies, investing in fintechs, entering joint ventures for developing products and solutions, setting up innovation labs, and sponsoring hackathons. You might adopt licensing and referral models to monetize fintech relationships. A fintech strategy is partly perception: You’re telling the market that you’re an innovator.

To succeed at innovation, executives need a strategy and execution plan. At the very least, innovation is a branding tactic progressive banks should take against banks that keep everything as it’s always been. Strategies should prioritize technological advancement and value partnering with fintechs. After deciding what innovations are right for your bank, it’s time to build a roadmap that embraces next-generation technology.