Banking IT Spend set to Increase as Competition Grows
The banking industry is navigating ‘massive structural change’, with product innovation its number one investment priority, according to Temenos.
The banking software systems provider, which is listed on the Swiss Stock Exchange (SIX), has issued its seventh annual customer survey, canvassing the views of 198 senior bankers.
Product innovation was named top priority by 24% of respondents. Among retail banks, the number was even higher, at 26%. Other key priorities, in turn, are digital channels, complying with new regulation and IT modernisation.
In terms of industry concerns – regulation, new competition and changing customer behaviour emerged as the biggest challenges. As in 2013, maintaining customer loyalty was the single biggest concern, cited by 30% of respondents, with bankers concerned that more empowered and better informed customers may begin to switch providers in greater numbers.
The survey found that competitive pressures from non-banks, are considered as least as serious as competition from within the industry, and with technology vendors, such as Apple and Google seen as the greatest threats (cited by 23% of respondents).
The survey revealed a further significant shift in banks’ attitudes to cloud computing, which have been changing rapidly over the past seven years. The results show that 86% of institutions run at least one application in the cloud, an increase from 57% in 2009, but concerns over data security are growing. This year, 38% of respondents said data security was the biggest barrier to more widespread adoption – a significant jump from last year’s results and likely influenced by revelations of National Security Agency (NSA) spying.
“The banking industry is undergoing a once in a generation shift, a second big bang,” said David Arnott, chief executive (CEO), Temenos, “As these results confirm, it is digitisation, changing customer behaviour and regulation that are driving the change.
“What is encouraging about these results is that banks appear to be both cognizant of the challenges ahead and making many of the right investments to be able to offer the customer-centric banking services to compete successfully in the future.”