An Economist Impact study, commissioned by banking software provider, Temenos, surveyed North American bank executives to find out how investment strategies have evolved to meet the growing impact of technology in the industry.
The Temenos report, Can disruptive technologies bolster the competitiveness of North American Banks? finds that while North American banks have traditionally lagged their global counterparts in adopting modern technology, that trend is shifting.
The study revealed 90 per cent of North American banks believe technology will have the biggest impact on their industry in the next five years as they aim to better compete with fintechs and non-financial companies and expand their customer base. This is compared to 63 per cent of banks globally.
Banks in North America also are prioritising moving domestic core banking to the cloud more so than those in other regions (36 per cent of North American banks vs. 26 per cent of banks globally). Further, 79 per cent of North American respondents said that a multi-cloud strategy will become a regulatory pre-requisite in the next five years, compared to 60 per cent in Europe.
Quoted in the report, Linda Powell, deputy chief data officer at BNY Mellon (BNYM), said: “All of the banks that I’m aware of are exploring moving to the cloud, because you can go to scale faster. If you build a good foundation for your data, you can bring in all sorts of technology on top of it to create insights and support execution. The lines of business can accelerate and use the data to serve our clients and provide the services that they need.”
A focus on DevOps
In addition, nearly a quarter of banks in North America (24 per cent compared with 18 per cent globally) are focusing their technology investment on DevOps. This is helping banks to speed up changes to their core systems and back-office processes. North American banks see artificial intelligence (AI) as a valuable tool for customer fraud detection more than any other region (20 per cent versus 11 per cent in Europe and 13 per cent globally).
Jonathan Birdwell, global head of policy and insights at Economist Impact, said: “North American banks expect competition from non-traditional players in the tech and e-commerce space, such as Google, Facebook, and Microsoft. As a result, they are increasingly moving applications to the cloud to best utilise emerging technologies, handle the growth of data, and protect market share from emerging non-traditional entrants.”
Fostering greater collaboration
Additionally, the survey identified collaboration with fintechs and other technology providers as essential for maintaining agility and competitiveness. Forty per cent of North American banks are participating in sandboxes with fintech and other technology providers to test new propositions compared to 32 per cent of global peers.
Philip Barnett, president – Americas, Temenos, commented: “The fear of being left behind and missing out on new markets is pushing North American banks towards greater adoption of disruptive technologies. Banks in this region are betting big on technology, with the goal of modernising and securing their core infrastructure and personalising customer experience and engagement.
“Tech investments are also helping banks compete with fintechs and non-financial companies, both on banks’ traditional turf and in newer spaces, such as embedded finance, where their competitors have led the way.”
