- The Number of Banking Executives Saying New Technologies Will Drive Global Banking Rises by 57% in a Year
- AI will separate winners from losers, say 77% of bankers surveyed during COVID-19
Two-thirds of banking executives believe that new technologies such as AI, machine learning will continue to have the greatest impact on the global banking sector in the next five years, according to a global survey conducted by the Economist Intelligence Unit (EIU) on behalf of Temenos, a banking software company.
The new report “Forging new frontiers: advanced technologies will revolutionize banking” highlights that COVID-19 is likely to accelerate the digital transformation of banks, which already face intense competition from payment players, Big Tech and e-commerce firms.
With COVID-19 accelerating the digitization of banking, 45% of banking respondents say their strategic response is to build a ‘true digital ecosystem’ and integrate their self-built digital services and third-party offerings.
“Banks were under huge pressure due to new competitors, ongoing regulation and slowing profit growth – these pressures have intensified as a result of the pandemic”, said Max Chuard, CEO of Temenos. “As the digitization of banking continues, these new technologies can help banks fend off competitors and gain competitive advantage.”
Artificial Intelligence is seen as a key differentiator in the sector
AI will undoubtedly play a key role in accelerating this digital shift. Over three-quarters (77%) of respondents agree that unlocking value from Artificial Intelligence (AI) will be a key differentiator between winning and losing banks. And improving user experience through greater personalization ranked highest (28%) among the most valuable uses for AI.
The focus is shifting towards enterprise agility with DevOps, which brings together software development and IT operations using modern cloud-based platforms. In fact, 84% of respondents agree that DevOps will drive transformation in core banking, while 81% of banking executives believe a multi-cloud strategy will become a regulatory pre-requisite.
The primary focus of banks’ technology investment is on cybersecurity (35%), followed by developing AI platforms such as digital advisors and voice assisted engagement channels (33%), and cloud-based technologies (27%).
“Retail, corporate and private banks were already under pressure to deploy new technologies quickly and change their cultures in order to compete with big tech firms and payment players and deliver an engaging digital experience. Now, as digital banking surges as a result of the coronavirus crisis, this task is more pressing than ever”, added Pete Swabey, editorial director of EMEA – Thought Leadership at The Economist Intelligence Unit.
Now in its seventh year, the Economist Intelligence Unit report includes for the first time respondents from commercial and private banks, alongside retail banks. The EIU surveyed 305 global banking executives about the challenges banks are facing relating to the digitization of the sector, and the strategies they are deploying in response.
Almost half of respondents (49%) were at C-level. Respondents came from Europe (25%), North America (24%), Asia-Pacific (18%), Africa and the Middle East (16%), and Latin America (17%).