Executives working in the financial services sector are predicting to see increased earnings over the next few years. Still though, what many of them fail to realize is that costs are not anywhere in-line with non-traditional competitors. Because of this, banks and credit unions need to strategize in a way that allows them to invest today in the latest technology that may not be of any use until later down the road.
Banks and credit unions that make investments in technology and innovation will see an increase in efficiency over the next few years. They will also realize that they are better able to manage evolving risks. More importantly, they will be able to provide enhanced customer service, which is vital to maintaining sustainable success. A recent study was performed by EY, and it was discovered that banks and credit unions are both working with high amounts of effort being devoted to becoming more digitally mature. They are seeking to leave behind their regulatory and transaction-driven practices, and instead replace them with innovation that puts them in better positions to overcome future challenges.
It should be noted, however, that even the best of the best won't move forward alone. It is high time that banks and credit unions start taking full advantage of the extensive ecosystem that is at their fingertips. It's time they start doing less themselves and make better use of the industry utilities that are available to them. In doing this, they can team up with a diverse range of partners to provide better services and enhanced customer support. They can also better mitigate risks and protect themselves.
Other highlights that can be found in the report mentioned above include:
- Out of the banks surveyed, 59 percent of them say they anticipate their technology investment budgets to increase by at least 10 percent through 2018.
- Of those that are starting to invest in new technologies, an amazing 44 percent of them want to purchase from a third-party. Even more astonishing is that only 17 percent of these
purchasersare going to hire an entity to help them onboard the technology.
- One of the top reasons banks and credit unions are investing in new technology is to provide themselves with a competitive edge.
- Of all banks surveyed, enhanced cyber and data security is their top priority. 73 percent of them plan to put money toward technology that mitigates cybersecurity threats and risks.
- Another notable aspect that garners much attention from banks and credit unions is the recruiting and onboarding of key talent; they believe top talent will help protect them from risks.
Ready for Change
Many financial institutions believe wholeheartedly that the worst of times are far gone. While the cost of compliance has most definitely increased over the past few years, making it higher than it was before the banking crisis took place, these financial institutions do believe that these costs have stabilized and will decline over the next few years thanks to changes put into effect by most firms.
The majority of banks that were included in the survey state they expect both their revenues and profit margins to increase during the next 12 months to three years. Due to an expected increase in revenues, many firms have already made the decision to invest larger amounts of money into technologies that fuel their core systems. As part of these investments, they are not only investing in new technologies but also in entering partnerships/joint ventures with partners who can help them utilize the technologies to their fullest extent.
While there is much optimism on the horizon, there could also plenty of storm clouds. Why? Well, if significant changes are not made to embrace new technologies and new processes, then we have a financial sector that is going to be completely discombobulated. We have to get to a point where everyone is focusing on the same thing, where everyone is focusing on technology and innovation and how it can improve the customer experience. Even though many have reduced their cost structure, we are still seeing that base cost of legacy financial services is exceeding those of
There is no denying that consumers have a high demand for improved delivery of their financial products and services. They want seamless service, and they want it now. With so much technology available, it makes perfect sense that they have such high demands and expectations. However, financial institutions are lagging behind in their ability to meet consumers' demands. Where are these demands stemming from? Big tech organizations have given consumers a taste of the stress-free life in regards to banking. These organizations include:
- Fintech firms
- Digital banks
- Platform banking providers
- E-commerce and telecommunication firms
The solutions offered by
Business Priorities Are Shifting
There is no denying that financial institutions view enhanced cybersecurity as a top priority. There have been numerous breaches over the past few years, which only highlights the reason for making cybersecurity even more of a priority. What we are seeing an issue with, however, is finding talent to fit both the role of a cybersecurity specialist and an analyst. But one thing remains the same; there is still a great desire to increase efficiency by investing and utilizing new technologies.
Other priorities that are making a name for themselves, according to the EY study include:
- Implementing digital transformation programs
- Gaining efficiencies through new forms of technology
- Investing in technology that enhances customer service
- Complying with consumer regulations
- Meeting compliance standards
- Improving risk management
It's No Longer an Option, It's a Necessity
Not that long ago, financial institutions had to host meetings and decide if investing in new technology was an option or a necessity. Those days are long gone. Investing in new technology is no longer an option, it's a necessity for all financial institutions. In order to become more digitally mature, new technologies must be adopted and utilized to their fullest manner. According to the EY study, the top four reasons to invest in new technology are:
- To grab part of the market share and strengthen competitive advantages
- To better engage and retain customers
- To produce cost savings and improve operational efficiencies
- To lower and completely mitigate cybersecurity threats and risks
Today is the day to start investing in tomorrow's technology. Also important to remember is that along with adopting new technologies, it is paramount that all staff members be trained to use the technologies. If no training occurs, then efficiency and operational effectiveness won't be improved. More so, it will lead to poor customer service.
With these investments in technology, you'll also need to start investing in talent. Build your team up with ICS the right way. We have a pool of candidates that can fit your every need and facilitate smooth sailing for your new tech strategy. Click below to get started today! We're ready to turn your weakness into one of your biggest strengths.