There is true optimism from the banking community about U.S. economic growth for 2015. However, growing concern regarding security breaches tempers CIO and executive management enthusiasm.
The growing influence of bank consumer preferences on financial institution strategy and spending has never been more evident than in budget priorities for 2015. Bank spending plans for the new year reflect the impact of bank customer wishes. Tech budget allocations display positive responses to consumer preferences.
Top Bank Spending Priorities for 2015
The top two priorities of the banking community are clear.
- Mobile banking—14.02%
- Online banking—14.02%
Remaining top priorities also reflect the consumer influence.
- Product development—12.15%
- Contact center development—10.28%
- Improving internal operation efficiency—6.54%
While digital banking, including mobile and online enhancements, dominates the tech spending landscape with over 28% of planned investment, budget allocation for overall tightened security of bank operations applies to all individual priorities. The recent data breaches at some major national retailers, such as Target and Home Depot, reinforced the need for attention to security upgrades.
As most bank CIOs and security directors are aware, the threat to customers’ sensitive information is a real and present danger. Although most senior bank management naturally is reluctant to openly discuss the severity of these threats when outside of their financial institutions, there is deep concern about the increasing hacker effectiveness levels.
American Banker reported on the research of Ovum, which surveyed 500 CIOs and other tech decision makers about their technology spending plans for 2015. Respondents indicated the lion’s share of 2015 budgets focus on mobile banking and online banking upgrades that offer more customer ability to perform transactions and better safeguard important personal information.
Digital Banking Initiatives and Growth Plans
The Ovum survey results identified CIO dedication to improve mobile banking, projected to grow by 7.5%, and online banking, with predicted growth of 7%, in 2015. As ever more bank customers use smartphones and tablets to perform financial transactions, the use of cutting edge technology becomes vital to bank success.Upgrading websites and mobile apps must be done to meet consumer demand for more tech services. Top banking technology firms, such as BankTEL, respond with more efficient software that makes financial institution executives comfortable employing expanded tech solutions.
A senior research director at a prominent tech consulting firm recently referenced banking giant, Capital One, and its purchase of digital marketing firm, Adaptive Path, as evidence of U.S. banks’ commitment to invest in state of the art technology as a major components of their “. . . alternative methods of doing business . . .” as a direct result of customer service demands.
It appears most banks will continue partnering with top technology providers to improve bank functionality and consumer security for mobile and online activity. Lower operating costs are another significant benefit that helps banks maximize their digital banking capabilities and protection levels.
Along with planned mobile and online banking upgrades, the Ovum survey also displayed bank tech spending will focus on customer analytics, particularly as they impact financial transaction mobility.
With tech spending projected at 5.8% more in 2015 on customer analytics alone, there is obviously “. . . great interest in solutions that help banks drive up crossselling and the average product holdings per customer,” stated Ovum’s financial services technology practice leader.
Financial institution resurgence has generated increased investment in retail banking, long subject to declining investment levels. The expanding use of cloud services and hardware pricing decreases offer economies of scale for the retail side of banking, reducing the cost center impact of retail transactions.
Digitizing operations, emphasizing mobile solutions, confirms the importance of customer analytics that indicate tech savvy bank customers want more mobile and online capability from their financial institutions.
The results of these tech spending increases on mobile banking, online banking, customer analytics, and security will ultimately determine the wisdom of bank decision makers to expand mobile operations. At the moment, however, the increased investment projects to be a rousing success, if tested and implemented properly.