When it comes to technological transformation in banks, spending smart, not spending more, is the key to success. This was the conclusion of a study by management consultancy firm Bain & Company, which involved 42 of the world’s largest banks by assets. Top players, wrote the report, create “a winning cycle in technology” by putting in “rigorous, consistent efforts to simplify and modernise where it matters most”.

The study analysed banks’ technology-related performance results along three dimensions – total shareholder returns (TSR), cost-to-income ratio (CIR), and net promoter score (NPS). NPS is a measurement of how likely existing clients are to recommend a product or service to others. TSR and CIR were taken from the past three years, while NPS was from the first quarter of 2023. The banks’ technology strategies were then assessed through 11 variables, ranging from board composition to the mix of profiles among IT staff.

Banks with a strong focus on technology came out tops, with, on average, TSR at five percentage points higher, CIR at 10 percentage points lower, and NPS at 12 percentage points higher than their counterparts in their regions.


Of the 11 variables, three appeared to have the strongest correlation with high performance: a board of directors that is tech-savvy, a higher number of in-house engineers relative to other IT staff, and positioning as a technology company.

Hold off on spending

According to the report, the worldwide average spend on information technology in banks is about 16 percent of the organisation’s total cost base. However, it observed that “spending more on technology alone did not lead to better performance” and that “in fact, IT spending relative to revenue had a negative correlation with performance”. The hypothesis was that “complexity increases when a bank ramps up IT spending too fast, because the funds can go to the wrong places, without the right oversight of architecture or continuous decommissioning”.

Tricks of the trade

Spain’s BBVA, Singapore’s DBS, and the US’ Capital One and J.P. Morgan Chase were named as top performers in the study. These banks shared three main common strategies in their journey to tech leadership: reducing costs through simplification, using digital channels and data analytics to connect with customers, and committing to becoming a technology powerhouse with pervasive, continuous investment.

The report concluded that, “the solution is neither to scale back ambitions and spend less, nor to simply spend more. Instead, it starts with a clear strategic intent from the top to modernise the business and its technology underpinnings to simplify and accelerate growth of the business. It’s all about intentional choices across the business”.