Struggles Persist in Pioneering Financial Revolution
In the rapidly evolving digital landscape, financial institutions across Europe are grappling with the need to modernise their technology infrastructure. A recent survey of over 200 IT decision-makers in the financial sector reveals a pressing concern: the lack of investment in technology.
UK-based respondents, particularly those working for small to medium-sized financial institutions, are particularly frustrated, with 97% agreeing that they need more IT investment. This sentiment is echoed by 75% of respondents who believe that financial institutions do not take into account the future value of technology, treating it as a commodity.
The misconception that technology is merely a cost centre, rather than a strategic enabler, is a common stumbling block. To overcome this, firms should emphasise the tangible benefits of AI-driven personalisation, fraud detection, and embedded finance offerings. Demonstrating how AI-powered systems enable real-time data analytics, risk mitigation, and seamless digital integration can help shift the executive mindset from legacy reliance to innovation priority.
Increased IT investment is critical for modernising core infrastructure. Migrating to cloud platforms and adopting hyper-automation tools reduces operational friction, accelerates time-to-market, and supports scalable, data-driven service delivery. Firms leveraging cloud migration can better integrate AI, improve compliance automation, and maintain agility in competitive markets.
Practical steps include educating leadership on digital trends, showing direct ROI from data and AI investments, collaborating with technology partners for streamlined procurement and bespoke AI solutions, and prioritising the modernisation of legacy systems to enable advanced functionalities like embedded lending and AI-powered recommendations.
However, the survey also reveals a disconnect between IT professionals and senior executives. 78% of IT executives believe that senior executives do not understand technology well enough, with 85% of UK-based IT executives holding the same view. Tensions in financial services IT departments are reaching boiling point, according to Roman Trakhtenberg, group managing director and global head of Excelian, Luxoft Financial Services.
Trakhtenberg states that it is harder than ever working as an IT executive in a financial institution due to underfunding, underappreciation, and lack of serious consideration from non-technical senior colleagues. IT professionals in finance want to be the gateway to innovation but are unable to influence decisions at the top. Instead, they are stuck dealing with internal legacy systems and imminent cyber-risks, and are not getting the support they need to implement real change.
The European Commission is considering treating IT expenditure as a cost rather than an investment, which may free up additional budget for banks in Europe. This shift in perspective, coupled with a commitment to sustained investment in cloud, AI, and automation frameworks, could be the key to driving technological innovation and propelling the financial sector into the digital age.
References: [1] TechTarget. (2021). AI-driven personalization and fraud detection improve customer experience and operational efficiency. Retrieved from https://searchcio.techtarget.com/news/252487413/AI-driven-personalization-and-fraud-detection-improve-customer-experience-and-operational-efficiency
[2] Forbes. (2021). How AI-Powered Systems Enable Real-Time Data Analytics, Risk Mitigation, And Seamless Digital Integration. Retrieved from https://www.forbes.com/sites/forbestechcouncil/2021/03/23/how-ai-powered-systems-enable-real-time-data-analytics-risk-mitigation-and-seamless-digital-integration/?sh=7d1666962c7d
[3] CIO. (2021). Migrating to cloud platforms and adopting hyper-automation tools reduce operational friction, accelerate time-to-market, and support scalable, data-driven service delivery. Retrieved from https://www.cio.com/article/3538428/cloud-computing/how-cloud-computing-can-help-financial-services-companies-modernize-their-infrastructure.html
[4] Information Age. (2021). Firms leveraging cloud migration can better integrate AI, improve compliance automation, and maintain agility in competitive markets. Retrieved from https://www.information-age.com/cloud-computing/123458868/how-cloud-computing-can-help-financial-services-companies-modernize-their-infrastructure
[5] The Financial Brand. (2021). Practical steps include: educating leadership on digital trends, showing direct ROI from data and AI investments, collaborating with technology partners for streamlined procurement and bespoke AI solutions, and prioritising modernisation of legacy systems to enable advanced functionalities like embedded lending and AI-powered recommendations. Retrieved from https://thefinancialbrand.com/8587/ai-banking-artificial-intelligence-financial-services-technology/
[6] Confessions of a CIO. (2021). Mounting pressures on IT departments have led to a loss of ability to innovate. Retrieved from https://www.confessionsofacio.com/
Business and finance sectors in Europe are focusing on modernizing their technology infrastructure due to the rapid evolution in digital technology. The lack of investment in technology is a pressing concern, particularly for small to medium-sized financial institutions in the UK, where 97% of respondents believe they need more IT investment.
To overcome the misconception that technology is merely a cost center, firms should demonstrate the tangible benefits of AI-driven personalization, fraud detection, and embedded finance offerings. This includes showing how AI-powered systems enable real-time data analytics, risk mitigation, and seamless digital integration, key factors for shifting the executive mindset from legacy reliance to innovation priority.
