Did you know that elements of robotic surgery have been around since the 1980s? 1985 saw the first use of a surgical robot, the PUMA 560, as it performed a CT-guided brain biopsy. Of course, recent rapid advances in technology and the integration of data, artificial intelligence (AI), and automation are revolutionizing the surgical space and healthcare. AI and robotic surgery can enhance precision and efficiency — allowing for better patient outcomes. The benefits of these technologies often justify the initial investment. As community financial institutions (CFIs) continue to invest in technology as a key strategic priority to achieve operational efficiencies and better serve their customers, do they believe they’re getting a good return on investment (ROI)? This and other key findings are explored in the Bank Director’s annual Technology Survey. The survey, conducted in June and July 2024, asked representatives from 111 US financial institutions (FIs) with less than $100B in assets about their strategy, resources, and approach to emerging technologies and fraud. Here are some of the main areas of focus and relevant findings.Technology Spend and ROI The majority (61%) of FIs surveyed say that technology is a strategic priority for their board, and that is what has driven their investment in technology over the last 18 months. Three-quarters of respondents said their technology budgets rose in the 2024 fiscal year, with a median technology budget of $1.5MM. Technology budgets represent a median of 10% of banks’ noninterest expenses, with a further 10% being devoted to new initiatives. Interestingly, only 21% of respondents say their FI actively measures ROI for technology projects. Without regular ROI assessments, FIs may struggle to validate the effectiveness of their technology investments or adjust strategies to optimize returns. Actively measuring ROI would enable CFIs to ensure effective resource allocation, measure performance, manage risks, and inform future strategic focus. Digital CapabilitiesSurvey respondents identify improving operational efficiency (49%) as the main objective of their technology strategy, followed by attracting and retaining customers (29%). The top three investments banks reported making over the last 18 months to improve or update the customer experience include payments capabilities (53%), digital retail account opening (46%), and digital business account opening (37%). Primary digital capabilities that respondents offer their small business customers include treasury management (73%), deposit account onboarding (58%), and integration with accounting systems (56%). Deposit account onboarding (79%), person-to-person payments (69%), and mortgage loan applications (58%) are the primary capabilities offered to retail customers. Respondents also believe offering real-time payment capabilities is just as important to small business customers (85%) as it is to retail customers (84%). With operational efficiency and customer retention as primary goals, CFIs are prioritizing technology investments that directly impact customer experience and streamline internal processes. The focus on payments, digital account onboarding, and integration with systems reflects a strategic shift to meet growing expectations for speed, convenience, and seamless functionality. However, to stay competitive and fully realize the value of these investments, CFIs should continuously assess customer needs and expectations. This involves not only investing in new capabilities but also regularly evaluating existing services to ensure they are effectively enhancing both customer satisfaction and operational performance.Emerging Technologies The majority (57%) of those surveyed describe their FI as a “fast follower” of new technology adoption. Key emerging tech areas that leadership teams and boards plan on allocating budget include data analytics (80%), AI (66%), and Banking as a Service (37%). Only 11% say their FI has a mature data strategy and uses data in many areas across the bank, while 16% report not having a data strategy at all. Given that a good data strategy and data analytics tools can enhance decision-making, improve customer experience, drive operational efficiency, mitigate risk, and help ensure compliance and regulatory requirements, this should be a top consideration for CFIs. Key areas in which respondents are considering using AI include fraud detection and prevention (84%), customer service (67%), and back-office efficiencies (67%). Interestingly though, only one-third have developed policies to guide the use of AI in their organization. The potential uses of AI in finance are significant. It presents a fantastic opportunity to help CFIs improve their customers’ experiences, streamline operations, and improve overall business efficiencies and performance but it is important that there is a clear AI strategy. This strategy should have specific use cases identified and policies in place to support AI’s use — something that only 33% of survey respondents report having adopted as a formal policy. Technology Challenges
Technology implementation is not without its challenges. Sixty percent of respondents say that one or more of their technology projects weren’t completed on schedule, and 36% say they experienced issues integrating new technology into existing systems. Advances in technology can also translate to increased opportunities for fraudsters and cybercriminals. A majority of bankers (89%) report being more concerned about fraud compared to last year. Types of fraud that respondents are most concerned about include check fraud (80%), phishing and social engineering (53%), and digital payments fraud (48%). Two-factor and multi-factor authentication (94%), extra verification for automated clearing houses and wire transfers (91%), staff training (89%), and customer education (75%) are the most common kinds of fraud prevention measures in place. To manage this ever-increasing threat, CFIs must stay informed and vigilant, implementing strong systems to proactively prevent and manage fraud, ensuring they can respond quickly to mitigate risks.As CFIs continue to navigate the complexities of technology investments, maintaining a focus on ROI, aligning capabilities with customer needs, and proactively managing implementation challenges will be critical. By balancing strategic tech adoption with a robust data and security framework, CFIs can position themselves to serve their communities effectively and enhance customer satisfaction, while remaining competitive.
Technology implementation is not without its challenges. Sixty percent of respondents say that one or more of their technology projects weren’t completed on schedule, and 36% say they experienced issues integrating new technology into existing systems. Advances in technology can also translate to increased opportunities for fraudsters and cybercriminals. A majority of bankers (89%) report being more concerned about fraud compared to last year. Types of fraud that respondents are most concerned about include check fraud (80%), phishing and social engineering (53%), and digital payments fraud (48%). Two-factor and multi-factor authentication (94%), extra verification for automated clearing houses and wire transfers (91%), staff training (89%), and customer education (75%) are the most common kinds of fraud prevention measures in place. To manage this ever-increasing threat, CFIs must stay informed and vigilant, implementing strong systems to proactively prevent and manage fraud, ensuring they can respond quickly to mitigate risks.As CFIs continue to navigate the complexities of technology investments, maintaining a focus on ROI, aligning capabilities with customer needs, and proactively managing implementation challenges will be critical. By balancing strategic tech adoption with a robust data and security framework, CFIs can position themselves to serve their communities effectively and enhance customer satisfaction, while remaining competitive.
