The implications of new regulations arising from the financial crisis continue to trouble banks the world over, according to the Temenos Community Survey by banking software provider Temenos.
Gauging opinion from 190 banking executives across a range of banking sectors in 71 countries, the research confirmed that the impact of regulation remains the biggest challenge facing banks today, with 24% of respondents citing this as their primary concern.
This finding is consistent with 2010 results, when 29% of respondents cited this as their biggest challenge and reflects concern over the impact that new regulation, like Basel III, is likely to have on their businesses.
According to the survey, other threats have continued to grow in importance among bankers this year. 23% of banks cited customer retention as their biggest challenge, up from 17% in 2010. The challenge of retaining their best customers is felt most by private banks (30%) and larger banks (31%).
Competition is also increasingly seen as a threat, with 18% of respondents citing it as the biggest threat facing the industry, compared to only 12% in 2010. The biggest perceived threats come from new entrants (mentioned by 30% of respondents), existing large incumbents (19%), overseas entrants (18%) and peer to peer services (15%).
The results also illustrated how banks’ perception of their biggest challenges is influencing corporate investment priorities. Banks named their top three investment areas as being: investment in new products and services, investment in IT and improving risk management.
Looking at IT investment specifically, banks are making available more money, with 64% confirming that budgets were up on the previous year (compared to 53% in 2010), and 26% citing that these were significantly higher.
The biggest budget rises were seen in the retail and wholesale segments and tier 1 and 2 banks and, as in prior years, the biggest areas of focus are: core banking renewal, risk management and business intelligence.
The research also covered other areas of interest to the banking community, including cloud computing and mobile banking.
Cloud computing continues to draw mixed views among bankers, the majority of which see the key advantage of running a cloud based model being increased organizational flexibility (38% of respondents), yet most are still deterred by associated data security and confidentiality concerns (50% of respondents) followed by a relatively large proportion citing lack of knowledge as a barrier to adoption (26%).
However, results suggest that despite these concerns, there could be a softening stance towards cloud adoption, with only 29% of bankers confirming they would completely rule out running applications in the cloud, compared to 41% in 2009.
The research also revealed the increasing importance of mobile banking, with 33% of bankers predicting the volume of mobile banking transactions to grow at an annual rate above 50% and 13% of bankers predicting a growth rate exceeding 100%.
Unsurprisingly, mobile banking is demonstrating the fastest growth in Africa, where one in five banks expects the market size to double every year for the next three years, the survey report said.