Banking It Spend to Rise Significantly to Counter Diminishing Customer Loyalty and Growing Competitive Threat
Spending on core systems, digital channels and analytics set to rise fastest
GENEVA, Switzerland – 17 September 2014 – Temenos (SIX: TEMN), the market-leading provider of mission-critical solutions to the financial services industry, today announces the results of its seventh annual customer survey, which this year canvassed the opinions of 198 senior bankers.
The survey covers areas such as banks’ corporate and IT priorities, their challenges, and their view of the competitive environment, as well as showing how views have changed over time.
This year’s survey reveals a banking industry navigating massive structural change, with product innovation its number one investment priority, cited 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 outside the industry, that is, from non-banks, are considered as least as serious as competition from within the industry and with technology vendors, such as Apple and Google are seen as the greatest threats (cited by 23% of respondents).
Finally, 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 NSA spying.
David Arnott, CEO, Temenos, said:
“The banking industry is undergoing a once in a generation shift, a second big bang. As these results confirm, it is digitization, 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.
The fact is that, notwithstanding the changes taking place in the industry, banks have great assets to be successful in the digital age. They have large customer bases, significant amounts of transaction data and the ability to offer integrated services. The key will be in leveraging those assets to take a greater role in customers’ lives, helping them to make better budgeting and spending decisions. This will require banks to move to real-time systems, to improve productivity and agility and offer all products and services over all channels. This is no mean feat, but at least banks seem alive to this challenge.”
Juan Pedro Moreno, Senior Managing Director of the global Banking practice at Accenture, which is an alliance-partner of Temenos, said:
“For many banks, product innovation will need to go hand-in-hand with a new mind-set. The most innovative banks will no longer think of themselves as mere providers of financial products and services and enablers of transactions. They will be solution providers that play a greater role not just at the moment of transactions, but before and afterward as well. They will aspire to be at the centre of the digital life of their customers. Mobile banking applications offering embedded payment capabilities and location-based discounts are just one example.”