Technology spending has become a priority at some of the world’s largest banks, according to a report by financial data and analytics firm Coalition Greenwich. Last year saw the biggest growth in expenditure of 5.4 percent year-on-year, bringing the investment in technology to 20 percent of the overall expenditure in these institutions and 40 percent of all functional area spending. A key driver is the increasingly demanding regulatory environment.
The report tracked the performance of 12 of the world’s largest corporate and investment banks by revenue since 2018, including Deutsche Bank, UBS, and Citi. Beyond keeping up with constantly changing rules, firms also leverage technology to ensure compliance and manage risks. The top three areas of investment are: risk and control systems; cloud migration; and client enablement, especially the digitalisation of workflows.
Stephen Bruel, senior analyst at Coalition Greenwich market structure and technology, pointed out that following the rules isn’t merely about compliance, but also about the reputational risk of non-compliance.
In line with the focus on technology, the study also found new asset classes, such as carbon credits and cryptocurrencies, to be new revenue opportunities for banks.