PROMONTORY INTERFINANCIAL NETWORK SERVICES UPDATE:
Banking on Technology
By Duffy Mees
Chief Information Officer
As a fintech firm, we are always interested in what technologies banks are investing in. Recently, we surveyed financial institutions about where they allocate budgetary resources for technology. Below we share some of the key findings.
- Current Priorities. When asked what area of technology they are allocating the most budgetary resources to, banks ranked information security (36%) and online/mobile banking (36%) as the two top priorities by a wide margin. Data management/data mining and regulatory technology lagged behind. At the bottom of the list were fraud detection (5%), marketing/customer outreach (4%), and automatic underwriting/online lending (3%).
- Investing Ahead. Given the growing threat of hackers and concern about online security and privacy, it’s not surprising that banks are shifting their technology investments to some degree. When asked whether they expected their investment in technology to change over the next two years, banks listed fraud detection (78%) and information security (77%) as their top priorities for significant or moderate increases in funding. The listing of fraud detection as a major target for investment going forward signals an important shift for some banks from their current spending patterns.
Interestingly, a majority of respondents (56%) indicated they plan on maintaining current spending levels for automated underwriting/online lending.
- Artificial Intelligence. In the banking sector, the movement toward using AI has been rather slow compared to other industries. Yet, according to our data, the pace of adoption may be quickening. Fifty-four percent of respondents stated that they expect to see AI systems become a familiar part of American banking in less than five years. About 10 percent think it will happen in two years or less. Breaking the numbers down by asset size, larger banks believe AI will be integrated into the banking sector sooner than smaller-sized institutions. However, approximately 50% of community banks believe the integration of AI at their institutions will happen in five years or less.
We hope you find this information helpful. Feel free to contact me if you have any questions or would like more information.