Core Processors Stalling Innovation, Say Bank Tech Executives

BRENTWOOD, TENN., August 30, 2016 – Eighty-one percent of bank chief information officers and chief technology officers responding to Bank Director’s 2016 Technology Survey say that their core processor is slow to respond to innovations in the marketplace, making it even more difficult for the banking industry to keep up with shifting consumer expectations regarding technology.

Thirty percent of bank CIOs and CTOs report that their bank has pulled back on plans to integrate a more innovative product, service or delivery channel due to the inability or unwillingness of the bank’s core processor to support that activity.

Banks are highly reliant on core providers for services beyond core processing, which at its most basic contains vital customer data and processes all customer transactions. Ninety-six percent of respondents say their bank uses their core provider for additional services, including mobile banking (71 percent) and bill pay (75 percent).

The 2016 Technology Survey is sponsored by the technology solutions provider CDW. In June and July, Bank Director conducted an online survey of 199 board members and senior executives of U.S. banks between $250 million and $20 billion in assets to examine how the banking industry is responding to technology trends such as data analytics and blockchain, and evaluates industry attitudes toward core providers and fintech firms, including marketplace lenders like Lending Club.

Other key findings include:

• Thirty-one percent of respondents have converted their bank’s core technology within the past five years. Forty-two percent converted their core more than 10 years ago.
• Respondents report that their bank works with a median of five technology firms, including the core provider.
• Sixty-one percent of participants see fintech firms as both competitors and partners.
• Online marketplace lenders should be more heavily regulated, say 60 percent of respondents. Forty-one percent worry that they’ll lose loans to these lenders, but 18 percent don’t think these lenders have long-term viability.
• Opinions are mixed on the impact that blockchain—the underlying technology behind the digital currency bitcoin—will have on the banking industry. Twenty-four percent believe it will impact all banks. However, 57 percent don’t understand blockchain enough to form an opinion, or have never heard of the technology.
• Cybersecurity looms large: Having a strong technology infrastructure in place to protect against cyberattacks remains the top technology concern for survey participants, at 72 percent.
• Seventy percent indicate that their bank could better use data to serve the needs of existing customers, or identify new customers.
• Seventy percent of respondents believe that technological innovation is a priority for their board, but less than half discuss technology at every board meeting.
• Thirty-four percent of respondents describe themselves as early adopters of technology.

Full survey results are available online at BankDirector.com, and will be featured in the 4th quarter 2016 issue of Bank Director magazine.

About Bank Director
Since 1991, Bank Director has served as a leading information resource for the directors and officers of financial institutions. Through its print and digital editions of Bank Director magazine, executive-level research, annual conferences, and its website, BankDirector.com, Bank Director reaches the leaders of the institutions that comprise America’s banking industry. Bank Director is headquartered in Brentwood, Tennessee.

Source: BankDirector.com

Contact: Michelle King, chief brand officer, (615) 777-8465, [email protected]