Are Banks’ Technology Bets Finally Paying Off?

Banks have been pouring billions of dollars into technology projects for a decade, raising at least two lingering questions: Have the investments been worth it? How do you know?

In the eyes of some observers, the answers are starting to become clearer. U.S. banks are finally beginning to see a payoff as evidenced by improved efficiency ratios, streamlined back offices and smaller workforces, certain research analysts say.

Skeptics counter that other factors including consolidation and stricter risk management are at work, too, in strengthening efficiencies and returns. The relative impact of the different forces is hard to calculate, they say, and the analysis varies based on a bank's size.

The anticipated tech returns are not expected across the board. There is a clear and growing technology gap between the top five banks and the smaller credit unions and banks, noted Alex Jimenez, managing principal in financial services consulting at EPAM Systems.

"One driver of this gap is the commitment to modernize technology and apply these capabilities to the organization, though it is not the only factor," Jimenez said. "Changes in strategy, business models and culture have enabled these larger banks to become digital leaders."

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Discover more banking trends in EPAM Continuum’s Consumer Banking Report.