The FINANCIAL — Eighty five percent of banks cite implementation of a digital transformation program as a business priority for 2018, according to the EY Global Banking Outlook 2018.
Investment in technology to drive efficiency, manage evolving risks and benefit from growth opportunities is seen by banks as critical for sustainable success.
Addressing cybersecurity is the top priority for global banks (89%) in 2018, replacing last year’s top priority of managing reputational, conduct and culture risks, which falls to sixth place in this year’s report. Recruiting, developing and retaining key talent (83%) also garners significant attention as banks strive to integrate cyber experts into their organizations amidst a skillset shortage.
The survey of senior executives at 221 institutions across Europe, North America, emerging markets and Asia-Pacific shows that banks are seeking to become digitally mature, completing the transition from regulatory-driven transformation to innovation-led change in order to insulate themselves from future downturns. Respondents indicate that few banks (19%) currently consider themselves as either digitally maturing or a digital leader, but more than half (62%) aspire to be one of the two by 2020.
Jan Bellens, EY Global Banking & Capital Markets Deputy Sector Leader, says:
“In order for banks to weather the performance challenges that lie ahead, they must prepare for a future led by innovation and technology. The pace of innovation continues to accelerate, and banks must have a strategy in place to ensure their implementation of new technology is effective.”
Other highlights from the survey include:
59% of banks surveyed anticipate that their technology investment budgets will rise by more than 10% in 2018.
For banks that are beginning to invest or increasing their investment in new technologies 44% plan to purchase the technology from a third party, while only 17% plan to acquire an entity to onboard the technology.
70% of banks cite strengthening their competitive positioning as a key reason for investing in technology by 2020.
Enhancing cyber and data security is the number one priority for banks, with 73% of banks planning to invest in technology to mitigate cybersecurity threats, supporting enhanced cyber and data security as a business priority.
Bill Schlich, EY Global Banking & Capital Markets Leader, says:
“Ten years after the global financial crisis, banks continue to experience increased competition from a range of new market entrants and evolving risks that challenge their ability to deliver sustainable profitability. To perform at the highest level, institutions must emerge from an era of regulatory driven transformation and develop strategies to tackle the new evolving risks that are preoccupying the C-suite.”