Bankers know they need to spend on tech; where should they focus?

Another report has emerged underlining community banks' increasing investment in technology. This one comes from Integris, and is quite extensive. The survey was conducted earlier this summer of 2,271 bank executives at institutions ranging from $3 million to $20 billion in assets. Cal Roberson, director of strategic partnerships of managed service providers for Integris, talked with BankBeat about executives' top strategic priorities within IT and technology for 2024..According to Integris' recent banker survey, most banks indicated they plan to increase IT spending by at least 10 percent next year. Very few, however, could confidently say how much they spend each year currently. What does this mean?.Cal Roberson: This means most banks appear to be operating without a managed budget. Over 80 percent of banks intend to increase their investments by 10 percent or more, and one out of five bank executives expect to increase spending by 20-49 percent. Not a single bank plans to reduce spending. At the same time, less than 6 percent of executives could confidently say how much they spend each year on IT. With IT budgets typically accounting for 4-10 percent of a bank's total revenue, this lack of insight indicates a potential mismanagement of the bank's resources. .It is surprising to see that such a small number of bank executives can talk specifics about their IT budget?.C.R.: While this may seem like a dilemma, it may actually be more an indication that banks are not being complacent when it comes to their cybersecurity posture. In an ever-evolving threat landscape, it is critical that bankers continue to be vigilant with their efforts and with their tech investments. The bankers who feel they spend too little on cybersecurity may have recognized vulnerabilities in their current defenses or witnessed the growing sophistication of cyber threats, prompting them to consider bolstering their cybersecurity investments to fortify their resilience against potential attacks. At the same time, it could also be an indication that banks are grappling with budgetary constraints and resource allocation challenges. .What may be more concerning is the 53 percent of bankers who believe they are spending enough on cybersecurity. They may have invested in comprehensive security solutions, implemented rigorous protocols, and fostered a cybersecurity-aware culture within their organizations. However, this sense of security could lead to complacency. .Digital transformation remains a top priority for many banks. Where should their focus be? .C.R.: There are several key areas. First, enhancing the customer experience is paramount, encompassing user-friendly mobile apps, streamlined online banking and personalized services. Second, cybersecurity and data protection must remain a top priority to ensure customer trust and regulatory compliance. Third, optimizing operational efficiency through automation, artificial intelligence, and process digitization can result in significant cost savings. .Additionally, banks should focus on data analytics to glean insights into customer behavior, enabling more informed decision-making. Lastly, fostering collaboration and partnerships with fintech companies can help banks stay at the forefront of innovation and rapidly adapt to evolving customer demands. .In sum, a holistic approach that blends customer-centricity, security, efficiency, data utilization and collaboration will drive successful digital transformation efforts..What other technology are banks prioritizing in 2024?.C.R.: Beyond digital transformation and cybersecurity, another key investment area for banks is external services, including cloud infrastructure and platform-as-a-service. More than 20 percent of banks are directing their attention toward investments in cloud-based solutions, which often offer benefits like increased scalability, cost-effectiveness and flexibility. By leveraging external services, banks can optimize their IT infrastructure and enhance their ability to adapt to rapidly changing market dynamics..To counter fraud, banks need to stay aware of the latest types. They must focus more intently on AI-driven risk management solutions that help detect fraud and uncover evolving risks. Fraudsters will continue to adapt, and banks should, too..What are commercial customers looking for specifically when it comes to a bank's technology?.C.R.: Commercial customers are increasingly seeking technology solutions that provide convenience, efficiency and security. They expect robust online and mobile banking platforms that enable easy access to accounts and transactions. .Additionally, they value advanced payment and cash management services that streamline their financial operations. Strong data security measures, including protection against cyber threats, are non-negotiable..Commercial customers are also looking for responsive customer support and the ability to integrate their banking systems with other business software, facilitating seamless financial management. .Ultimately, they expect their community bank to offer technology that helps them compete in a digital business environment while maintaining the personal touch and local expertise that community banks are known for.