As firms seek to harness data-driven insights for sustainable growth and resilience, a recent Quantifi survey of global banks highlights the importance of technology in the banking sector. While regional differences in investment priorities exist, the overarching trend highlights the pivotal role of technology in shaping the future of banking operations on a global scale.
Investing in AI and Data
The survey reveals that banks worldwide are gearing up to boost investment in AI and data to enhance risk management. Across all regions, over 60% of respondents are looking to ramp up their utilisation of AI, while at least half are eyeing increased investment in data analytics. The emphasis on AI and data-driven strategies demonstrates a shift towards proactive risk mitigation practices, aimed at transforming data into actionable intelligence for fostering sustainable growth and resilience.
There are diverse regional variations in investment priorities. North American respondents unanimously favour process automation; however, the sentiment is starkly different in the UK with 0% thinking the same, whilst Europe leans towards leveraging third-party analytics. Europe also advocates for data transformation to enhance accuracy, completeness, and timeliness, along with cloud adaptation as key investment areas.
Interestingly, there is a contrast between the risk and technology sides regarding investment priorities. While there is some alignment on data analytics and the utilisation of AI and data, disparities emerge in other factors. Technology teams lean towards process automation as pivotal, whereas Risk underscores the importance of an integrated risk management platform and workflow management. Additionally, Risk prioritises technology resiliency, while Technology champions cloud adaptation and data transformation for accuracy and timeliness.
The findings highlight a landscape where banks are recalibrating their investment strategies to strengthen risk management capabilities. Regional nuances and different perspectives between risk and technology stakeholders emphasise the multifaceted nature of modern risk management challenges and the evolving role of technology in addressing them.
Technology spending trends
Ongoing investing in technology is important for companies to do well and stay competitive. Globally, businesses are getting ready for the future by focusing on new technology and progress. However, different regions have different ways of doing this.
Across North America and Europe, most banks are putting more money into technology with a clear plan. They recognise that using technology well helps them work better, develop new ideas, and stay ahead of the competition. Whether it’s using smart computers for predicting trends or using risk management systems that can scale with their business, banks are being smart about where they put their money to make sure they’re ready for what’s next.
The UK is a bit different from North America and Europe. They’re not putting as much money into new technology, but they’re still thinking smart about it. Instead of going all out, they’re focusing on keeping the technology they already have working well. UK banks are trying to save money by being cautious about where they spend on technology, especially during times of uncertain market conditions.
In other parts of the world, like the Rest of the World (ROW), there’s a cross spectrum of ideas about how to spend on technology. Some banks are only investing a little, some a reasonable amount, and others are going all in.
The survey highlights that different regions have different needs and ways of thinking about technology. When thinking about spend, banks need to consider regional regulations, how good their existing systems are, and what their clients want and expect.
Budget blues or boons
Banks worldwide have varied expectations regarding technology budget trends. While some banks expect to increase by 1-15%, others foresee a decrease. In North America, half of the banks stated they will spend more money. The others said they will either spend the same or less. In the UK, it’s a 50/50 split between banks spending more or less, but some banks are increasing their spending more than others. In Europe and other parts of the world, some banks might spend less, while others might spend a lot more; up to 25% extra.
Factors influencing these disparities are likely to be driven by regulatory environments, market conditions, investment priorities, and urgency for transformation. Stringent regulations may prompt budgetary expansions to improve compliance and risk management frameworks. Equally, in stable economic climates, some banks might opt to streamline costs, potentially trimming risk technology allocations. Additionally, shifts towards digital transformation could prompt increased investments in cybersecurity and innovative risk mitigation tools.
Navigating technology spend
In the world of banking, figuring out how much to spend on technology is a big decision. Banks globally are thinking hard about where they want to put their money. Some are ready to invest more to stay ahead of the game, while others are being a bit more cautious. Whatever they decide, one thing’s for sure: technology is playing a big role in shaping the future of banks worldwide.
The key driver behind technology spend is the increasingly demanding regulatory and compliance requirements placed on these institutions. Banks are not only looking to manage new rules, but also invest in the solutions required to ensure compliance and risk control.