UBS: Larger banks set to spend more on technology
09 April 2019 Basel
Image: Shutterstock
Some 87 percent of participants from banks with assets of $250 billion and above suggest that technology spending will increase annually over the next three years, according to a UBS survey.
The survey also indicated that 70 percent of participants from banks with assets under $100 billion thought budget and a lack of resources could prevent technology spending and therefore hinder successful implementation of a bank’s intended technology strategy.
UBS stated that larger banks are better positioned to leverage technology to gain share and improve efficiency as they have bigger technology budgets, yet they are more likely to increase technology spending in the coming years when compared to smaller bank counterparts.
Commenting on the survey results, UBS said: “The competitive environment in the banking industry is increasingly being shaped by technological capabilities. Banks that are better able to leverage technological capabilities to grow and retain clients, manage risk, and reduce costs will be long-term winners. The absolute size of technology budgets appears to be a constraint for smaller banks.”
Around half of survey respondents from banks with $51 to 100 billion of assets and 66 percent of those at banks with $1 to 50 billion of assets specified that their firms spend less than $100 million annually on technology.
UBS suggested that in addition to having the capital, larger banks are more capable and therefore able to focus on innovation and revenue enhancement.
The investment bank found 35 percent of respondents from banks with more than $100 billion in assets flagged innovation as a leading area of technology spend in their bank or department. This was compared to 26 percent for sub $100 billion asset bank respondents.
UBS stated larger banks appear to be well ahead on artificial intelligence (AI), blockchain, legacy system modernisation, and cloud computing as the survey highlighted 75 percent of respondents from banks with assets above $100 billion said they were already implementing AI strategies.
In comparison, less than half of respondents from sub $100 billion asset banks explained that AI strategies are being implemented.
A further 67 percent of respondents from banks of all sizes were more likely to describe fintech as both a potential partner and competitor than as solely a competitor.
The most cited areas of partnership included AI, payments, online and mobile banking, blockchain, big data, wealth management services, and lending.
UBS conducted survey interviews with 203 IT professionals across 175 US banks from December 2018 and January this year.
The respondents worked for banks ranging in size from having less than $1 billion in assets to those with more than $500 billion of assets.
The survey also indicated that 70 percent of participants from banks with assets under $100 billion thought budget and a lack of resources could prevent technology spending and therefore hinder successful implementation of a bank’s intended technology strategy.
UBS stated that larger banks are better positioned to leverage technology to gain share and improve efficiency as they have bigger technology budgets, yet they are more likely to increase technology spending in the coming years when compared to smaller bank counterparts.
Commenting on the survey results, UBS said: “The competitive environment in the banking industry is increasingly being shaped by technological capabilities. Banks that are better able to leverage technological capabilities to grow and retain clients, manage risk, and reduce costs will be long-term winners. The absolute size of technology budgets appears to be a constraint for smaller banks.”
Around half of survey respondents from banks with $51 to 100 billion of assets and 66 percent of those at banks with $1 to 50 billion of assets specified that their firms spend less than $100 million annually on technology.
UBS suggested that in addition to having the capital, larger banks are more capable and therefore able to focus on innovation and revenue enhancement.
The investment bank found 35 percent of respondents from banks with more than $100 billion in assets flagged innovation as a leading area of technology spend in their bank or department. This was compared to 26 percent for sub $100 billion asset bank respondents.
UBS stated larger banks appear to be well ahead on artificial intelligence (AI), blockchain, legacy system modernisation, and cloud computing as the survey highlighted 75 percent of respondents from banks with assets above $100 billion said they were already implementing AI strategies.
In comparison, less than half of respondents from sub $100 billion asset banks explained that AI strategies are being implemented.
A further 67 percent of respondents from banks of all sizes were more likely to describe fintech as both a potential partner and competitor than as solely a competitor.
The most cited areas of partnership included AI, payments, online and mobile banking, blockchain, big data, wealth management services, and lending.
UBS conducted survey interviews with 203 IT professionals across 175 US banks from December 2018 and January this year.
The respondents worked for banks ranging in size from having less than $1 billion in assets to those with more than $500 billion of assets.
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