Almost half of banks are set to increase investment in modernisation of IT assets in a bid to meet customer needs, a survey has claimed, with a strong focus on digital transformation.
A survey of 220 CIOs and IT managers across global, retail, private and corporate banking firms, showed that almost half of respondents are set to increase budgets in the next two years.
The report, carried out by consultant firm Pierre Audoin Consultants (PAC), indicated that investment in IT modernisation will increase for 46 percent of banks worldwide. It also highlighted that 50 percent of German banks are set to raise their investments, compared to 39 percent of UK banks and 26 percent of banks in France.
In the UK the main priority for investment will be digital transformation, with 50 percent of respondents increasing budgets for this purpose, higher than the worldwide level of 37 percentage.
“For banks in the UK, transforming digitally has become of particular importance as new entrants including Tesco, Metro Bank, and Virgin Money have revitalised competition," said Eike Bieber, PAC senior consultant, Banking and Insurance, and author of the study.
"The survey results indicate that UK-based banks are more aware of the relevance to digitally adapt their business, although PAC forecasts growing budgets in this area of worldwide level, not only in the UK,” she added.
Co-operative Bank is one example of a UK bank which has planned a £500 million IT investment to enable its digital transformation, while Barclays has invested in its digtal strategy with development of its PingIt platform.
For the wider market, ensuring ‘smooth IT operations’ will remain the top priority for most IT decision makers, particularly for respondents in German and France (83 percent and 74 percent).
The survey indicated that only 33 percent of UK respondents consider this a major challenge, which the author claims to be due to a large proportion of UK banks having outsourced parts of their IT responsibilties.
Investment in security is also expected, with 61 percent of respondents in France and Germany preparing to increase their spend. The figure is lower in the UK, 44 percent, while 11 percent expect a decrease in security spending.
The survey also indicated that, for many respondents, reducing IT costs is a challenge. Half of those surveyed globally cited cost efficiencies as an ongoing challenge, with the figure higher for Germany (80 percent), and France (60 percent). 50 percent of banks in the UK identify IT costs as a problem.
More than a third expect cost reduction to be an even greater problem in the future, the report claimed.
“Many banks are prepared to invest in state-of-the-art technology and are making bigger budgets available to do so. However, whilst banks are still making savings, these tend to be in other areas – predominantly IT operations,” said Bieber. “At the same time, we anticipate that banks will continue to be very circumspect about their IT investments and will take a gradual approach to topics such as digital transformation.”