8 Budgeting Ideas That Support Growth

Every budgeting season is different. That’s because each season, community banks greet a fresh set of economic realities that forces tradeoffs and shifts priorities.

Matt Pieniazek, president and CEO of Darling Consulting Group in Newburyport, Mass., anticipates that the 2025 budgeting season will be “one of the more difficult ones in quite a while,” thanks to three large question marks currently looming: the interest rate/economic environment, the outcome of this year’s general election and geopolitical unrest.

Rather than placing strong bets on a future rate environment, he suggests making the 2025 budget “more of a story” and less of a “best guess” roadmap. Should conditions change, management and the board would be able to adjust it to a different set of outcomes.

Aaron M. Panton, regional president for The Bank of Missouri in Perryville, Mo., has a slightly different response to the uncertainties out there. He is doubling down on aspects of his $2.9 billion-asset institution’s strategic plan that make it unique and taking steps to ensure the community bank isn’t spread too thin.

“There are a lot of shiny objects, and banks can get distracted easily,” says Panton. “But if everything is important, then nothing is important.” Because of this, he’s viewing budgeting season “as a chance to realign and stick close to the strategic priorities of the organization.”

Whatever approach your community bank is taking for the 2025 budgeting season, here are some ideas worth considering and exploring.

“I tell bankers, ‘There’s really no bad strategy [for budgeting]. But when you do have a strategy, do it right.’”

—Paul Schaus, CCG Catalyst

Invest in digital delivery to create a more user-friendly experience

Panton encourages community bankers to consider alternative approaches to how they deliver services to customers. “In the past, our industry told customers: ‘Here’s how you bank,’” he says. “But the pendulum has been swinging for quite some time, and now we have to adapt, [rather than forcing] our customers to adapt.”

At The Bank of Missouri, a prime example of that swing is the installation of interactive teller machines (ITMs). Throughout its 29-branch network, the community bank currently has 32 ITMs. Advantages include expanded office hours, which is one way to “meet customers where they need to be met,” says Panton. “ITMs give us the ability to reach customers virtually.”  

Jim Schartman, president and cofounder of Check Printing Contract Consulting, agrees. “The younger customer segment is looking for banks that have the easiest digital setup; they basically want to do everything with their phones,” he says. For this reason, he maintains that spending on convenience through actions like enhancing digital channels is critical.

For community banks seeking ways to fund digital investments, Schartman advises scouring expenses for possible savings, including renegotiating a bank’s check-printing contracts. A vast majority of the time, he says, “banks are leaving money on the table with check printing, because they don’t know any better.”

Pay for employee education

The talent crunch has been a reality for quite some time. “Boomers are being pushed to retire or have retired, and their knowledge is leaving with them,” says Paul Schaus, managing partner of Phoenix‑based consulting firm CCG Catalyst. “There’s not enough new people to fill the [experience] gap.

“In the past, the thinking was: ‘The big banks train employees well, and we’ll just steal them later,’” he adds. “But today, the big banks have fewer [corporate-wide] training programs and are more siloed.”  

He therefore believes that “as boomers who were 30 or 40 years in the business retire, educating people is increasingly important.”

The Bank of Missouri is dedicating dollars to developing top talent. Panton conducts “intentional conversations” with his most promising employees to learn the best ways to “equip our team with the tools and resources necessary to be productive.” These conversations result in individual development plans. 

“I’m a big believer in focusing on our top talent, diving into what their needs are and helping them fill any gaps,” says Panton. “Investments there are going to provide the outcomes we’re looking for.”

Make data analytics a budget priority

“If my strategy entails net new business, I need to budget for data analytics,” says Charles Potts, chief innovation officer for ICBA. “If I’m going to grow my bank and grow my business, I need to know what I have, what’s valuable and viable, and what I need to do more of.”

Potts notes that even for community banks looking to reduce expenses, data analytics is critical. Without data insights, he says, a community bank has no idea what areas can and should be cut.

“Identify a desired outcome—and then let people in the branch come up with a [budget] strategy.”

—Matt Pieniazek, Darling Consulting Group

Set aside dollars for technologies that promote operating efficiencies

Technology is one area where the “shiny object” problem can rear its head with a vengeance. For this reason, Pieniazek urges community bankers to look for fintech partners or tech solutions that let banks “become more efficient at what they’re doing already.”  

A starting point is examining processes that require manual intervention, asking whether these processes could be streamlined and done in a more automated fashion. Data entry is one example of a good place to start, says Pieniazek. Others are accounts receivable or accounts payable processes and other back-office functions.

Rethink the way you’re budgeting for marketing

Marketing spend may have cratered during the pandemic, but banks are investing in their own success again. 

Potts identifies a perverse outcome of annual budgets when it comes to marketing: Often, the most successful projects for generating new, profitable business cease to be funded at some point during the calendar year.

The problem, he says, is that “too often, you run out of marketing dollars and your project ends. And yet you may be generating massively profitable gains from the project.” He therefore urges community bankers to ask themselves: “What are you doing with the gains [from a new initiative]? Are you plowing the gains back into continuously feeding the program?” 

The solution lies in planning to reinvest in aspects of a marketing strategy even if that reinvestment falls outside the tidy annual schedule of the budgeting cycle, says Potts.

View branch budgeting more creatively

Sometimes, executives kill a branch simply because they can’t work out a budget that makes that branch profitable. Pieniazek urges executives to task branch staff with coming up with their own strategies for generating loan activity and/or cutting costs.  

“Identify a desired outcome—and then let people in the branch come up with a strategy,” he says. Once the desired outcome is known, “Let them decide how they can make it happen.”

Remember to budget for building-block technologies

Potts reminds community bankers to invest in middleware or API connectivity for their data systems. Only then, he says, are you “putting in place the right tools so you can grab new business and onboard it more efficiently and effectively—and in a more timely fashion—than before.”

Put paid to a rinse-and-repeat mindset

“A lot of organizations don’t think of their budgets as being strategic. They think of them as being tactical,” says Potts, who notes that such thinking is limiting. 

“It’s important that the bank has a very good strategic plan and a good roadmap for what it’s trying to do, and budgeting has to dovetail with that very closely and very specifically,” he says. 

Potts also suggests that the budgeting process can help community banks reevaluate all the initiatives they’ve committed to. During this time, bank leadership can kill old projects that haven’t panned out.

Above all, community bankers must make sure the budgeting process is thoughtful. “Don’t go into the process with a rinse-and-repeat mindset,” says Potts. “Have a north star, have a strategy, have goals and objectives in mind.”

In the end, Schaus agrees. Budgeting, he says, is a matter of choosing a strategy and then executing it with focus. He says, “I tell bankers, ‘There’s really no bad strategy. But when you do have a strategy, do it right.’”