Financial institutions continue to prioritize technology and innovation in 2023 as operational efficiency and client experience remain a priority amid uncertain economic times.

In a report earlier this year by Arizent, 70% of banks said they would increase tech spend in 2023, a trend that proved true in the first quarter.

For example, in Q1 as the economy had many banks reevaluating where to spend, FIs like Discover Financial Services, Goldman Sachs and Wells Fargo all upped their tech spend.

Discover Chief Financial Officer John Greene said during Q1 earnings: “We’re a digital institution; we need to invest in technology to ensure that we keep capabilities advancing.”

Banks that are well equipped with technology can more easily navigate changes in the finance industry — including economic turbulence, according to the report “The Banking Battleground 2023,” released this month by CCG Catalyst Consulting. The consulting company surveyed 122 C-level bank executives on three topics: business trends and priorities; technology and innovation; and new frontiers. Based on responses, banks were categorized as traditional or progressive institutions. Progressive respondents were those that acquired less than 50% of their technology from a single vendor, working with fintechs as part of their strategy and making at least one fintech investment.

In the report, respondents ranked the importance of technology for their institutions. The report found:

• Progressive banks’ top five areas of importance are data account opening, mobile app experience, AI, biometrics and cloud utilization; and
• Traditional banks top five areas of importance are mobile app experience, biometrics, desktop and online experience, peer-to-peer payments, and data analytics.

“Over the past few years, it was a lot easier for more traditional institutions to behave in an innovative way,” CCG Catalyst Director of Research Kate Drew told Bank Automation News. “Now, it’s very much back to the basics,” she said, noting that progressive and traditional banks rank mobile app experience and biometrics as important areas of tech.

Other technologies, including robotic process automation, workflow process automation and blockchain/distributed ledger technology ranked the lowest in importance, according to the report.

Five-year plan

The C-level execs also ranked their top priorities for the next five years. The report found:

• 64% of all respondents plan to improve the customer journey;
• 41% of all respondents plan to diversify their client base;
• 34% of all respondents will leverage data and analytics to improve cross-selling opportunities; and
• 27% of all respondents will integrate with fintechs to provide new services; 50% of progressive banks said they will integrate with fintechs for new services.

Based on this report, “It’s important to know what your peers are doing and how that applies to your bank,” Drew said. “You should always be strategic about how you are spending.”

The report shows that over the next five years, most respondents feel “generally prepared” from a technology perspective but less prepared in a general sense compared with last year’s report by the consulting firm.