Temenos: North American banks ‘betting big’ on disruptive tech

North American banks are “betting big” on disruptive technologies to better compete with fintechs and non-financial companies, such as Big Tech firms, according to research by Temenos.

A clear majority of North American banks, at 90%, believe technology will have the biggest impact on their industry in the next five years, found the Economist Impact study, commissioned by Temenos. This is compared to 63% of banks globally.

Moving domestic core banking to the cloud is a priority for 36% of banks in North America, versus 26% of banks globally, the study revealed.

Temenos found that 79% of North American respondents said that a “multi-cloud strategy” will become a regulatory prerequisite in the next five years, compared to 60% in Europe.

The survey was conducted among 300 executives in retail, commercial and private banking spanning Europe, North America, Asia Pacific, Middle East and Africa, and Latin America, with the findings published in the report ‘Can disruptive technologies bolster the competitiveness of North American banks?’.

Quoted in the report is Linda Powell, deputy chief data officer at BNY Mellon, who said: “All of the banks that I’m aware of are exploring moving to the cloud, because you can go to scale faster.

“If you build a good foundation for your data, you can bring in all sorts of technology on top of it to create insights and support execution. The lines of business can really accelerate and use the data to serve our clients and provide the services that they need.”

The survey also revealed ongoing collaboration between banks and fintechs, with 40% banks in North American banks participating in sandboxes with fintech and other technology providers to test new propositions, against 32% of global peers.

The fear of being left behind and missing out on new markets is pushing North American banks towards greater adoption of disruptive technologies, according to Philip Barnett, president, Americas at Temenos.

“Banks in this region are betting big on technology, with the goal of modernizing and securing their core infrastructure and personalizing customer experience and engagement,” he said.

“Tech investments are also helping banks compete with fintechs and non-financial companies, both on banks’ traditional turf and in newer spaces, such as embedded finance, where their competitors have led the way.”

The research also showed that North American banks see AI as a valuable tool for customer fraud detection more than any other region at 20%, versus 11% in Europe and 13% globally.

Recent separate research by Temenos conducted among US adults found that three in five expect all payments to be digital in the “near future”, with 71% having already adopted mobile or online banking for payments.