Banks intend to increase their IT spend "significantly" to counter decreasing customer loyalty and increased competition in the market, according to new research.
Banking software company Temenos questioned 200 senior bankers globally and found that digital channels, complying with new regulation and IT modernisation were key priorities for the coming year.
In terms of industry concerns, regulation, new competition and changing customer behaviour emerged as the biggest challenges. Maintaining customer loyalty was the single biggest concern, cited by 30 percent 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 outside the industry, from non-banks, is considered at least as serious as competition from within the industry, with technology vendors like Apple and Google seen as the greatest threats among a quarter of the survey respondents.
The annual survey also revealed 86 percent of banks run at least one application in the cloud, an increase from 57 percent in 2009, but concerns over data security are growing.
This year, 38 percent of respondents said data security was the biggest barrier to more widespread cloud adoption – a big jump from last year’s results and likely influenced by revelations of NSA spying, said Temenos.
David Arnott, CEO of Temenos, said, “The banking industry is undergoing a once in a generation shift, a second big bang. 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."