Moving Forward: Making Tech a Priority

Bank tech is back. It never really went away, of course. But this year, bankers seemed to remember in a big way that first-class technology is critical to their competitiveness — and relevance.

And in a bit of good news for the fintech industry, they're expanding their IT budgets accordingly.

The decisions surrounding what to buy, what to build and what to continue to live with are not only challenging, they're mission critical. With an eye to that reality, American Banker and BAI have made substantial changes to the FinTech program this year. In addition to our exclusive rankings and profiles, the new FinTech Forward offers a roster of promising companies to watch and provides fresh insight into spending drivers — the major trends that we believe will persist into 2015, including: mobile wallet adoption, deeper use of Big Data, branch transformation, monetization of mobile banking, responsiveness to new security threats, and implementation of workflow technology.

In an online survey fielded by American Banker/SourceMedia Research, 58.4% of bank executives said they're increasing their tech budgets for 2015. (A third said they would spend the same as this year, less than 5% plan to spend less on technology next year.)

To be sure, not all of this is even optional (count compliance in the mandatory category). But consider that about a fifth of bankers (21.2%) say they are boosting their tech budget to increase revenue. And 29% of the bankers surveyed said they are stepping up tech investment to increase efficiency. If this sounds like a tacit acknowledgment that a lot of what's out there today is not efficient, it is. Many banks are feeling pushed by the success of nimble nonbank competitors (think OnDeck's phenomenal growth in online small business loans and Apple's payment debut) to upgrade legacy systems.

Where will the rest of the dollars go? The most common tech categories for bank spending next year, according to the American Banker/SourceMedia Research survey, are mobile payments (43%), online or mobile account opening (38.7%), risk management (35%), fraud management (31.2%) and document management (27.9%). Institutions are also looking for new solution providers in regulatory compliance (42%), customer experience (40.8%), analytics (36.3%), staff productivity (35%) and fraud management (29.3%).

The comments of one regional bank chief information officer put a fine point on some of this. He is targeting three priorities. First is expense management in an environment in which revenue growth is challenging yet investments are critical to support regulatory requirements, product development, and service enhancements. Simplifying and otherwise improving processes in an increasingly strict compliance environment came second. Third was dealing with the increasing number and sophistication of cybersecurity threats.

The new, improved FinTech Forward won't take all the stress out of decision-making, but we're confident it will lead to better informed decisions as you pursue your institution's tech needs in 2015.