In the most recent global banking survey by Economist Impact in 2021, banks faced challenges due to the pandemic speeding up the shift to online banking.

This led to the closure of physical branches and gave a boost to digital-first competitors. Fintech startups and tech giants gained ground, pushing traditional banks to rethink their strategies.

The survey found that 63% of respondents expect new technologies to impact banks the most in the next five years. This sentiment has been consistent since 2019. Schuyler Weiss, CEO of Alpian, said that modern technology is crucial, especially for younger generations born into a digital world.

About half of the survey participants predict that banks will no longer own data centres in the next five years, moving instead to the public cloud. Additionally, 70% believe that using multiple cloud services will become a regulatory requirement. In this shift to the cloud, banks prioritise digital channels, international core banking services, and payments.

As Fintechs, tech companies, and higher consumer expectations reshape the banking landscape, banks are reevaluating their roles. The concept of embedded finance is encouraging banks to be more open and become true ecosystems.

Collaboration with Fintechs, leveraging expertise in technologies like AI, and environmental considerations are driving the move to the cloud. By becoming more integrated into consumers' lives, banks aim to enhance customer experiences and secure a central role in the evolving ecosystem.

Kalliopi Chioti, Chief Marketing and ESG Officer at Temenos stressed how evolving consumer preferences are impacting banks. Technology, including AI and eco-friendly solutions, can be a powerful ally for banks in aligning with customer values.

Key Highlights:

• A recent Economist Impact report for Temenos, based on a survey of 300 global banking executives, indicates that around 73% of banks plan to offer more sustainable banking options in the next five years. This shift is driven by a focus on customers and the evolving role of banks in people's lives and businesses.
• Public attention is now focused on banks' values and climate efforts, with research showing that 24% of European consumers might switch banks if they aren't engaged in environmental, social, and governance (ESG) issues. Generation Z is expected to drive this shift, with 61% of UK banking customers wanting their provider to contribute more to positive social and environmental impacts.
• These changing consumer sentiments are reflected in banking practices, with 37% of banks investing in eco-friendly technologies. Additionally, 31% are adopting sustainability strategies to reduce emissions in their operations.
• This focus on sustainability has translated into increased investment in environmentally friendly projects, with 74% of banks expressing a desire to invest in such initiatives in the next five years. Furthermore, 64% are considering shifting capital away from carbon-intensive industries.
• As banks aim to reduce their carbon footprint, an important trend is the shift of operations to the public cloud. More than half (51%) believe that banks will no longer own private data centres in the next five years.

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Source: IBS Intelligence