Pub. 5 2017 Issue 3

www.uba.org 8 A s a fintech firm, we are always interested in what technologies banks are investing in. Recently, we surveyed financial institutions about where they allocate budgetary resources for technology. Below we share some of the key findings. • Current Priorities. When asked what area of technology they are allocating the most budgetary re- sources to, banks ranked information security (36 percent) and online/ mobile banking (36 percent) as the two top priorities by a wide margin. Data management/data mining and regulatory technology lagged behind. At the bottom of the list were fraud detection (5 percent), marketing/ customer outreach (4 percent), and automatic underwriting/online lend- ing (3 percent). • Investing Ahead. Given the growing threat of hackers and concern about online security and privacy, it’s not surprising that banks are shifting their technology investments to some degree. When asked whether they expected their investment in tech- nology to change over the next two years, banks listed fraud detection (78 percent) and information security (77 percent) as their top priorities for significant or moderate increases in funding. The listing of fraud detec- tion as a major target for investment going forward signals an important shift for some banks from their cur- rent spending patterns. Interestingly, a majority of respon- dents (56 percent) indicated they plan on maintaining current spending levels for automated underwriting/ online lending. • Artificial Intelligence. In the banking sector, the movement to- ward using AI has been rather slow compared to other industries. Yet, according to our data, the pace of adoption may be quickening. Fif- ty-four percent of respondents stated that they expect to see AI systems become a familiar part of Ameri- can banking in less than five years. About 10 percent think it will happen in two years or less. Breaking the numbers down by asset size, larger banks believe AI will be integrated into the banking sector sooner than smaller-sized institutions. However, approximately 50 percent of commu- nity banks believe the integration of AI at their institutions will happen in five years or less. We hope you find this information helpful. For more details, view the full Bank Executive Business Outlook Survey report at www.promnetwork.com/busi- ness-outlook-survey. n About Promontory Interfinancial Network Chosen by more than 3,000 financial institutions nationwide, Promontory Interfinancial Network is the leading provider of FDIC-insured deposit placement services. Banks can use the company’s solutions—In- sured Cash Sweep, or ICS; CDARS; Promnet Repo; IND; Yankee Sweep; Bank Assetpoint; and Residential Mortgage Network—to build multi-million-dollar relationships, reduce collateral requirements, purchase funding, manage liquidity, and buy or sell loans. Visit promnetwork.com to find out how Promontory Net- work can help your bank to manage its balance sheet more profitably. ©2017 Promontory Interfinancial Network, LLC BANKING ON TECHNOLOGY By Glenn Martin, Regional Director, Promontory Interfinancial Network