The study, carried out by independent researchers LM Research, includes responses from 15 major UK banks and other financial institutions. According to the findings, 60% of respondents named regulatory change and the pressure of compliance as the key challenge (with competition 53%, fraud or criminal activity 53%, and Net Promoter Scores 53% also top distractions).
However, despite the regulatory pressure and the CMA’s intentions, only 27% believe Open Banking will improve their business and make it more competitive, and only 13% believe it will allow them to offer their services to customers of other banks.
Competitive threat is seen to be coming from incumbent banks (80%) rather than challengers such as Atom and Monzo or technology businesses such as Amazon or Facebook applying for banking licenses (33%).
Only one-fifth of respondents named outdated and / or failing technology as a key business challenge, with just over two-thirds (67%) seeing their bank as a technical leader. On the flip side, a third agreed that existing technology was the single biggest thing holding them back from executing on innovation, along with internal systems and processes (27%) and a risk-averse culture (20%).
80% of respondents confirmed they are investing more than GBP 25 million into ‘innovation’ every year, with over a quarter (27%) spending more than GBP 100 million. While the majority said they are seeing a return on that investment in terms of PR or planning, only half (53%) said that the innovation team’s work is delivering new services into customers’ hands on a regular basis.
The majority of respondents agreed that digital transformation is critical to the future of the bank (73%), and 47% are working towards a goal of releasing new services at a faster pace in the coming two years. Only 7% of respondents are worrying about hiring the right talent to support that transformation.
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