Economist Impact Research for Temenos shows that North American banks are investing heavily in technology

NEW YORK and GENEVA, Switzerland – November 20, 2023 – North American banks consider technology to be the biggest trend affecting their industry – and are focusing their investment strategy accordingly, finds an Economist Impact study commissioned by Temenos, which surveyed bank CEOs in North America.

The report, “Can Disruptive Technologies Strengthen the Competitiveness of North American Banks?”, finds that while North American banks have traditionally lagged behind their global counterparts in adopting modern technology, this trend is changing. The survey revealed that 90% of North American banks believe technology will have the biggest impact on their industry in the next five years – compared to 63% of banks globally – as they aim to better compete with fintechs and non-financial companies and expand their customer base.

Banks in North America are also prioritizing moving domestic core banking to the cloud more than banks in other regions (36% of North American banks vs. 26% of banks globally). Additionally, 79% of North American respondents said a multi-cloud strategy will become a regulatory imperative in the next five years, compared to 60% in Europe.

Quoted in the report, Linda Powell, Vice Chief Data Officer at BNY Mellon (BNYM), said, “All the banks that I know of are exploring moving to the cloud because you can scale faster. If you build a good foundation for your data, you can bring all kinds of technology on top of that to drive insight and support execution. The lines of business can really accelerate and use the data to serve our customers and deliver the services they need.”

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In addition, nearly a quarter of banks in North America (24% compared to 18% globally) are focusing their technology investments on DevOps. This helps banks accelerate changes in their core systems and back office processes. North American banks see artificial intelligence (AI) as a valuable tool for detecting customer fraud more than any other region (20%, versus 11% in Europe and 13% globally).

Jonathan Birdwell, Global Head of Policy & Insights, Economist Impact, said:

“North American banks expect competition from non-traditional players in technology and e-commerce, such as Google, Facebook and Microsoft. As a result, they are increasingly moving applications to the cloud to make the best use of new technologies, manage the growth of data and protect market share from new non-traditional players.”

In addition to investing in cloud capabilities, the survey found that collaboration with fintechs and other technology providers is seen as key to remaining agile and competitive. Forty percent of North American banks participate in sandboxes with fintech and other technology providers to test new propositions, compared to 32% of global peers.

Philip Barnett, President – Americas, Temenos, commented:

“The fear of being left behind and missing out on new markets is pushing North American banks towards greater adoption of disruptive technologies. Banks in this region are investing heavily in technology with the goal of modernizing and securing their core infrastructure and personalizing customer experience and engagement. Tech- investments also help banks compete with fintechs and non-financial companies, both in banks’ traditional turf and in newer spaces such as embedded finance, where their competitors have moved ahead.”

About this research:

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Economist Impact conducted a study, commissioned by Temenos, to understand new trends in the banking sector. This report presents insights from a global survey of 300 retail, commercial and private banking executives spanning Europe (25%), North America (23%), Asia Pacific (18%), the Middle East and Africa (17 %) and Latin America (17%). The survey as completed during July 2023. The respondents perform various job functions, such as IT, customer service, finance, marketing and sales, strategy and business development as well as general management, etc. Half of those surveyed were C-suite executives. This is the seventh year that Economist Impact has conducted this survey. The study also included interviews with industry professionals to gain further insight.