In recent years, the banking industry has increasingly embraced technology adoption to improve operations, enhance customer experience, and stay competitive. However, according to a new report, 75% of financial institutions struggle to reap the benefits of newer payment offerings and maintain cyber security measures due to a lack of modernization of their core systems. 

Endava’s Retail Banking Report reveals that despite over half (55%) of financial institutions saying that their core systems were moved to the cloud, problems remain with competing technical priorities (40%), a lack of technical resources to manage it (37%), a fear of a long implementation (32%), and fraud/security concerns (29%). 

 “Financial institutions need to leverage digital technology to truly modernize the core and create a flexible and dynamic infrastructure that can quickly respond to customer and market demands,” said Fred Fuller, Global Head of Banking at Endava. “Although they think their technology is stronger than their competitors, the reality is that new features and functionality are usually built on old systems, which massively limits their scope for innovation.”

The report also found that 75% of organizations believe they offer a good user experience (UX), strong data management practices, and better technology than competitors. The majority (85%) want to dial up digital customer experience, with customer-centric banking and modernization becoming key goals.

The report mentions that financial institutions should examine economic drivers, such as creating a more profitable and loyal customer base to tackle rising interest rates and inflation. At the same time, many institutions are turning to new technologies to improve internal processes and customer-facing products. 

Artificial intelligence (AI) and data analytics are at the top of their lists; both can offer powerful real-time fraud detection, virtual assistants, security, and investment management. A strong 81% are preparing to upgrade existing open banking and payment gateways.