Banks are laying the foundation for the digitization of their businesses and anticipate emerging technologies -- from IoT to biometric authentications and blockchain -- to make a substantial imprint on the industry within five years, according to a recent survey of banking professionals commissioned by VMware.
Results of the survey made one thing very clear -- technology will drive banks' next transformation. The question for financial institutions is no longer whether to invest in technology, but how fast they can invest. And, banks are already laying the groundwork for their digital transformation.
When respondents were asked to describe their bank's core mission over a 3- and 5-year horizon, respondents described the bank's top business focus as "integrating digital and physical channels" and "becoming a digital leader," respectively.
Emerging Technologies Take Center Stage
■ More than 50 percent of banks with $100 billion or more in assets expect to have commercial implementations of the following major categories of emerging technology: mobile apps, APIs/open banking, artificial intelligence (AI), augmented reality, biometric authentications and blockchain -- in the next five years.
■ 78 percent of respondents say that AI voice-based banking has the potential to be transformative in retail banking; about a third say AI voice-based banking could be transformative in commercial banking.
■ 67 percent of respondents from banks with $100 billion of assets or more are currently implementing blockchain technology.
Implementation Challenges
■ Integration of new technologies into existing platforms and upgrading legacy systems are banks' top implementation challenges. In fact, 46 percent of respondents say legacy infrastructure has some impact on their institutions' ability to launch new products.
■ Of bankers who say legacy infrastructure has a high impact on their ability to launch new products about half of respondents say their institutions are currently engaged in data center modernization (52 percent) and cloud computing projects (48 percent) to address the problem.
Impact of Data Center Modernization and Cloud Computing Deployments
■ 81 percent of respondents from banks with $100 billion of assets or more and 68 percent of respondents from banks with $15 billion to $100 billion of assets are currently implementing cloud computing technologies.
■ Among banks currently considering, piloting, or implementing security upgrades, data center modernization programs, cloud computing deployments, and fintech innovations, at least 73 percent expect the initiatives to have a moderate to high impact over the next 12 months.
■ 82 percent expect the initiatives to have a moderate to high impact in five years.
Methodology: In June 2017, VMware commissioned a survey conducted by SourceMedia Research. The online survey yielded responses from 166 respondents, who were drawn from American Banker magazine's opt-in contacts, to understand their current and future outlook for business and technology, and emerging technologies in banking. The survey sample consists of banking professionals at manager levels and above at banks with at least $15 billion in assets.
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