Current Banking Technology Outlook: 384 Financial Executives Weigh In
--Originally published on CUNA--
With an industry in flux—what are the smarter ways to move the “providing a better client experience” needle across all channels?
t's a common challenge most financial institutions face as the battle for deposits, loans, and convenience is as fierce as ever.
The answer increasingly lies in an array of technologies, fintechs, and strategies to help bridge the gap and modernize legacy systems. New data from CFM+NXTsoft+IMM’s recent survey of 384 financial executives’ sheds lights on what financia institutions are focusing on and the tactics they’re using to get there.
Technology progressiveness has remained stagnant YOY and most still give themselves a so-so grade
Overall, financial institutions are feeling slightly optimistic on their technology progressiveness, giving themselves a 62%. While most agree there is still work to be done, it seems executives may be stuck as this ranking has remained stagnant YOY according to CFM+NXTsoft’s research from 2022.
Despite the fact that there are some industry leaders and laggards in financial institutions of all asset sizes, the average tech progressiveness score for FIs under $500m is 5 points lower (60) than the FIs larger above $500m (65).
While feeling a little behind on their efforts, the overwhelming majority agree that the improving banking experiences across ALL channels remains a top tech priority. 72% say the enhancing the digital banking experience is most important, achieving greater sales growth at 63% is second, and improving the branch experience is in the third spot at 61%.
Digital strategies dominate in the quest to improve client experiences
69% of executives say digital onboarding is the focus to create a better member experience. Right behind that is 63% trying to improve their mobile app.
With such a strong focus on improving digital onboarding and services to meet rising consumer demands, the anticipated rise of embedded fintech and banking as a service is real. 68% of FI executives consider integrated fintech partners critical to their technology investment strategy. That means API connectivity to integrate these services directly into banking cores and mobile apps to provide a seamless member experience will become even more critical.
Reducing transaction times and improving self-service are in a close fight for the third top tactic, depending on asset size. Larger financial institutions ($1B and up) are keen to invest in self-service machines, while smaller financial institutions under $1b are looking for ways to reduce transaction times.
Financial institutions are seeing a higher return on their tech investments YOY
The good news is more executives are seeing their investments pay off. More than 47% have seen an increase in wallet-share from to their tech investments—which is 12% higher than in 2022. While a smaller gain, 32% (up from 28% in 2022) say they have reduced been able to reduce their FTE spend, too.
For those financial institutions who scored in the more innovative category, 61% of those say they increased sales through tech investments. That’s almost 3X higher than those that are in the lagging category!
Even in these uncertain economic times, 40% say they are increasing their technology budgets. Somewhat surprisingly, cost cutting slid down in priority YOY, too (going from 3rd to 5th.)
FI’s recognize the importance of the people part of the equation in increasing wallet share, embracing that technology alone doesn’t equal success
When asked what their top strategy was for increasing wallet-share, improving staff training at 79% was the most important—beating upgrading mobile and digital offerings at 74%. Encouragingly, most recognize that if you build it, doesn’t necessarily mean people will come. Convenience is of course key, but it doesn’t necessarily replace having the right advisory conversations to help convert.
When it comes to what technology FIs are willing to spend their money on, 85% say the most important factor is the impact it has on the client experience. Integration ranks second at 68%, with pricing coming in at 62%
Self-service and cross-trained staffing models deliver the highest ROI
Executives who say improving the branch experience is their top priority are finding self-service machines and implementing a cross-trained staffing model are highly effective at increasing client convenience. 73% of them attributed the increase to self-service, and 84% said Universal Associates were effective.
Cash Recyclers are considered the most critical branch technology
When asked what the most critical branch technologies are, Cash Recyclers came in at #1 with 48% of the votes, ATMs were a close second at 47%, and ITMs were third at 37%.
Despite 47% of financial institutions under $500m indicating that reducing transaction times is a top 3 priority, only 42% are using one of the best tools to accomplish this.
For more insights, download CFM+NXTsoft+IMM's 2023 report.