European Retail Banking IT Priorities and Strategy in 2023

While the macroeconomic environment in Europe remains challenging, retail bank technology spending in Europe has grown steadily in 2023. The high-level themes behind this vary between country and financial institution, but maintaining compliance and delivering the enhanced agility needed to meet changing customer needs are the standout topics. Closely linked is the emphasis on enhancements to the customer experience in key areas such as digital customer onboarding and small business banking. In addition, projects to explore the opportunities in the open ecosystem (open banking, BaaS, and embedded finance) are now commonplace.

The focus on agility is particularly noteworthy. There are many factors underpinning this, but one of the most fundamental is the cultural change that has been catalysed by the growth of the fintech sector and the way the industry needed to adapt to the pandemic. Banks are increasingly open about their desire to become more responsive and nimble, and recognize that they need to adapt their approach. The pace of the adoption of cloud technologies, surge in activity around AI, and investment in open ecosystem projects all highlight the scale of this shift in attitudes.

To provide greater insights into the strategic and product-level technology priorities of the industry, Celent has once again run its Technology Insight and Strategy Survey. In capturing the perspectives and opinions of 228 senior executives across the Retail Banking industry, we have a granular view on the technology investments that will lead the agenda, as well as the products and processes that will see the greatest change. Our global sample includes responses from 84 product and technology executives from financial institutions in Europe.

Some of the key findings from the research include:

• 74% of retail banks in Europe report that the competitive threat from fintechs and challengers is increasing.
• 65% of European banks cite delivering greater speed and agility as one of the three most important drivers of their current technology strategy.
• Technology budgets are growing at a moderate pace. Expectations are positive for 2024, with banks expecting budgets to increase by 4.5%.
• 43% of banks highlighting digital account opening as a key initiative. Offering a streamlined digital onboarding experience has become increasingly important, not least because of the impact of fintech entrants on the market.
• 54% of banks in Europe are currently exploring use cases for Generative AI, while a further 32% have projects related to this technology on their roadmap for 2023/4.

The message for the industry is clear. Banks in Europe plan to raise the bar in several workflows and product areas, while also investing in the capabilities to respond more quickly to future opportunities. Those that do not keep pace with these changes risk being left behind.