Banking industry's approach to technology shifting

Digital customer experience, innovation and cost reduction are the top priorities for banks, according to The Top Global Banking Technology Trends report.

According to the study, commissioned by Virtusa and conducted by Finextra, the market sentiment appears to be positive, with budgets being freed up from regulatory compliance initiatives to spend on innovation, measures to improve business efficiency and new products and services. Key findings from the study include:

• Digital customer experience (79%), innovation (45%), and cost reduction (46%) are the top three areas of expenditure
• 87% of respondents said that their institution is evaluating or has already launched API-based services
• 50% of respondents are building out a new, dedicated infrastructure for their mobile channels
• 54% of respondents viewed blockchain for international payments as being of either the highest or a high priority; 44% was the similar figure for domestic payments
• 86% of respondents have already adopted cloud, with a significant amount (38%) adopting hybrid solutions

The research paper includes input from over 100 banking executives, including C-level executives, vice presidents, and directors from global banks, regional banks, and fintechs from 25 countries across North America, Europe, and Asia Pacific.

New technology in banking

The research paper also highlights that banks are now actively partnering with relatively small suppliers, seeking to use regulatory changes to drive new income streams and use new technologies like microservices, artificial intelligence, and blockchain to provide enhanced internal controls, security, and support new customer propositions.

According to the study, the use of APIs is not a new initiative, but regulations and compliance have driven their wider adoption. Banks are embracing their use to meet the expectations of their customers and match the competitive offerings of new entrants. Bank and fintech partnerships are emerging, and although there are challenges in working together, the survey results record 70% of respondents have at least one solution in production.

Bob Graham, Executive Vice President and Global Head of Transformation Services at Virtusa commented: “This study with Finextra identifies the current trends in the banking industry and assesses the top focus areas for banks. The banking industry is undergoing a seismic shift that demands banks reinvent themselves. The study shows several trends accelerating over the past year including open banking, cloud, microservices, fintech partnerships, and the use of artificial intelligence and machine learning that are all driving banks to expand the frontiers of digital transformation.”

The Top Global Banking Technology Trends study can be accessed here.

Earlier this month, a survey of Indian treasurers highlights clear focus on technology by treasury – and need for leading banks to invest in latest digital tools if they are to maintain market share. According to a study by Greenwich Associates, two major factors playing a role in companies’ decisions about which banks to use are banks’ willingness to lend, and innovation across their banking products, processes and digital platforms.