Amid US Bank Hack Cleanup, Banks Plan to Significantly Increase IT Spending: Report

[Audrey McNeil <audrey () riskbasedsecurity com>]

http://www.thewhir.com/web-hosting-news/amid-us-bank-hack-cleanup-banks-plan-significantly-increase-spending-report

Two-thirds of banks plan to increase their IT spending this year, the most
since 2008, according to a report released Wednesday by Swiss banking
software companyTemenos. The survey also found that 86 percent of banks
currently run at least one application in the cloud, as financial
institutions face increasing competition and decreasing customer loyalty.

Temenos surveyed 198 senior bankers and compiled results which emphasize
some of the major recent trends in technology and commerce.

The biggest barrier to cloud adoption is data security, as identified by 38
percent of respondents.  This number represents a significant increase,
which Temenos says is likely due to the NSA revelations of the ongoing
Snowden leaks.

Data security concerns are likely on the minds of many bankers after five
US banks were hacked in August. Other attacks on banks this year include
the theft of €500,000 early in the year from a European bank.

“The banking industry is undergoing a once in a generation shift, a second
big bang,” Temenos CEO David Arnott said. “As these results confirm, it is
digitization, changing customer behaviour and regulation that are driving
the change. What is encouraging about these results is that banks appear to
be both cognizant of the challenges ahead and making many of the right
investments to be able to offer the customer-centric banking services to
compete successfully in the future.”

The shift to digitization Arnott refers to is easily seen in the banks’
competition concerns. Customer loyalty was named the biggest challenge by
30 percent of respondents, while the top competitive threat, cited by 23
percent, was not banks but tech companies, including Google and PayPal.
 Given that Apple Pay was not yet announced when the survey was being
compiled, that number may yet increase.

“The most innovative banks will no longer think of themselves as mere
providers of financial products and services and enablers of transactions,”
Senior Managing Director of the global banking practice at Accenture  Juan
Pedro Moreno said. “They will be solution providers that play a greater
role not just at the moment of transactions, but before and afterward as
well. They will aspire to be at the centre of the digital life of their
customers. Mobile banking applications offering embedded payment
capabilities and location-based discounts are just one example.”

While banks are recognizing and working towards the digital mobile future,
cloud adoption is still limited, as only one percent of banks core
processing is cloud-based.

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