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Only 26% of banking professionals think existing banks are their main competition and most are concerned about technology companies eating into their market shares, a global banking survey has revealed.
Research from Temenos showed that banks see a significant threat coming from banking players not currently operating in their market, such as overseas banks and challenger banks.
But banks are most worried about the threat from non-traditional players, especially technology companies, according to the Shifting sands: Banking in the digital era report, carried out by Capgemini’s financial services arm.
Google is the biggest threat, said 27% of respondents.
These companies are moving into banking, offering payment and information enrichment services, as well as peer-to-peer lending. Their technology platforms are agile enough to try things out to see if they work and also have enough money to make acquisitions if needs be.
As a result of more competition and less customer loyalty, banks are more focused on keeping customers happy, the survey showed.
Part of this challenge is being met by increased investment in IT systems and innovation. “The focus on IT systems is up significantly year on year, going from fourth priority last year to top priority this year, as banks begin to grasp what it will take to be successful in the digital age,” said the report.
The study revealed that 64% of respondents anticipate higher IT spending over the next 12 months.
Coinciding with the increasing customer-focused IT spending comes a reduction in the challenges posed by regulation. Since the credit crunch of 2008 and the subsequent global banking turmoil, regulators have heaped pressure on banks.
Michael Leyva, global banking practice lead at Capgemini Financial Services, said banks are well aware of competitive threats.
“They understand the customer loyalty landscape is changing and are changing their strategic priorities accordingly, with more emphasis on fostering innovation, enabled by renewing technology and hiring the right talent,” he said.
“This is consistent with the increases in IT budget spend we see, as banks recognise more focus needs to be on digital and supporting data insights to provide greater customer value.”