In a blog post, Joy Macknight, Editor of The Banker, explains that banks worldwide are undergoing digital transformation driven by the need to enhance customer experience, reduce costs, and compete effectively. However, they face challenges tied to legacy tech, complex processes, and evolving regulatory requirements.
"Many banks are struggling to show results from their vast investments; however, a few leaders stand out among their peers by being able to create value from technology," Macknight writes.
She points to recent research by Bain & Company, which analyzed 42 banks and found that the more tech-savvy organizations outperformed peers, boasting 5% higher shareholder return, a 10% lower cost-to-income ratio, and a 12-point higher net promoter score. Importantly, Bain noted that simply increasing tech spending did not correlate with better performance, indicating the need for strategic tech choices.
The research outlined four paths to tech leadership: simplifying operations to reduce costs, becoming a technology powerhouse, leveraging digital and data for customer engagement, and replacing legacy systems with a clean slate. Leading banks in their respective regions, such as BBVA, DBS, Capital One, and JPMorgan Chase, demonstrated that consistent efforts to simplify and modernize critical areas are essential for creating a winning technology cycle. JPMorgan Chase, in particular, was cited as a case study for its modernization program. The bank ranked first globally in AI capabilities among major banks, according to the Evident AI Index.