Digital Strategies & Open Banking Are Top Issues for FIs

An increasing number of financial institutions, touching every category and spanning every asset size, are turning to digitalization to achieve traditional goals, according to a new “Banking Priorities Executive Report.”

The Paducah, Ky.-based Computer Services, Inc., a provider of end-to-end financial technology solutions, surveyed 227 U.S. banking executives (3% were from credit unions) from across all asset-size ranges to identify the most pressing issues facing the industry.

The research identified a clear pattern of digital prioritization with an increasing number of financial institutions turning to digital answers to achieve traditional goals. “Some institutions are further along in their digital transformation, but overall awareness of the need for a digital strategy to enhance the customer experience is clearly growing,” it said.

The report also indicated banking executives perceive interest rate variability (41% of respondents) and application programming interfaces and open banking (19%) as issues that will most affect the industry in 2020.

Though regulatory issues such as data privacy and the Bank Secrecy Act modernization registered highly, financial institution executives across the country cited investing in technology as a key priority, particularly as related to digital-only strategies.

An overwhelming 96% of financial institutions surveyed will either increase technology spending in 2020 or maintain their 2019 spending level. Within that majority, 64% will spend more.

Steve Powless, CSI’s chair and CEO, held financial institutions are looking ahead to incorporate new digital strategies and offerings that will not only keep them competitive this year, but also help them stay ahead of the curve for the next decade. “From investing in new technologies to implementing plans that minimize cybersecurity threats, banking executives have devised plans that help them better serve their customers and stand out from their competitors.”

In addition, while survey respondents indicated cybersecurity readiness as one of their strong suits, many pointed to social engineering (41%) as a major risk. Eight in 10 will use workforce education and awareness to combat this evolving security threat, while seven in 10 will rely on tech-centered methods like penetration testing and cybersecurity risk assessments.

Last October, nearly three-quarters of consumers (74%) revealed they would likely participate in their financial institution’s cybersecurity awareness or education program, if offered, according to a CSI white paper and survey.

The survey, the “2019 Consumer Cybersecurity Poll,” also found an overwhelming majority of consumers (92%) have concerns about the security of their personal confidential data online.

“Although consumers may not understand the technical aspects of it, they still expect and demand that banks and credit unions do everything in their power to protect both their identity and financial accounts from fraud,” the earlier study said. That report also noted taking a proactive approach to cybersecurity education can help banks and credit unions increase customer or member retention. Over half of consumers (58%) indicated they would drop their financial institution if it suffered a data breach.