Banking and investment services CIOs are increasingly convinced that their old business models and existing value propositions will not be sustainable in the future.
This is among the findings from Gartner’s 2018 CIO Agenda Survey, which gathered data from 3 160 CIO respondents in 98 countries and across major industries, including 354 banking and investment services CIOs.
“Digital transformation and its related technologies such as APIs are more important for banking than for other industries,” says Pete Redshaw, managing vice-president at Gartner. “Banks and other banking and investment services organizations clearly recognize that the status quo is not sustainable, and they must disrupt themselves before it is done to them.”
When it comes to strategic business priorities, the survey found that digital business/digital transformation is more important for banking (first priority for 265 of respondents) than for all industries (17%).
Just behind digitalisation at 25%, growth/ market share is a further key priority, followed by complementary focus areas of profit improvement and customer focus (12% and 11% respectively).
Banking and investment services CIOs also place a relatively high priority on the globalization of their businesses (seven percent), a priority which does not make the top 10 at all for the all-industries average.
Geographic expansion is clearly important for a business that is easier to scale over physical distances using electronic movements of money, and seeking higher growth in emerging markets.
In response to the question “Which technology areas do you think are most important to helping your organisation differentiate and win (achieve your mission)?”, BI/analytics topped the list with banking sector CIOs at 26%, followed by digitalisation/digital marketing at 21%.
In terms of differentiating technologies, four categories stand out when compared to other industries:
* Artificial intelligence (AI) is seen as more differentiating (8%) for banking than the all-industries average (5%).
* The combination of application programming interfaces (APIs) at four percent and omnichannel/multichannel at three percent are not especially high, but they are not present at all in the all-industries top 10.
* Legacy modernisation is a top 10 item for the banking industry, but not present in the all-industries list.
* The Internet of Things (IoT) is a top-10 item for all industries (six percent), but is not present for banking and investment services.
“These priorities point to a continuing tension between two opposing forces,” says Redshaw. “On the one hand, there is a need to rapidly transform the business, while, on the other hand, there is the innate inertia that arises from a huge IT estate that supports a heavily regulated industry.”
Blockchain does not feature, having ranked 20th for banking and investment services. Despite the attention and visibility, it is not yet seen as a differentiating technology for banks. That may change in the near future.
Planned additional spend on digitalisation/digital marketing is also much more prominent in the banking and investment services sector (22%) than the all-industries average (12%).
“This is an industry that recognizes that a firm must become truly digital – in culture, value and technology – if it is to stand a chance of surviving and thriving,” Redshaw says.
Cloud is ranked lower in the banking sector (fourth versus second for all industries) but has the same percentage assigned to it (13%). Banks would like to make more use of public cloud, but are held back by their risk-averse culture and their regulators.
For AI, there is only a small difference in absolute terms between banking and all industries, but it is a large one in relative terms (7% versus 4% – nearly double). Being able to turn raw data into actionable information by spotting unexpected patterns or developing superior algorithms will strongly differentiate banks that do this well from their more mediocre rivals.