50% of Banks Depend on Legacy Tech

Dragonfly Financial Technologies just completed a survey of more than 100 bank executives, 85% of which maintain a positive banking outlook for 2024. Based on that optimism, 51% of respondents believe banks will increase their technology spending or keep it the same (41%), while less than 8% are expecting to decrease their technology spending in 2024.

But, here’s the surprise, at least to me. The survey discovered that more than 53% of banking executives are concerned regarding their current dependency on legacy technology and rising technology debt, with more than half (51%) saying that legacy technology/technology debt is in the way of their bank’s success. 

Other concerns uncovered by the study include: 

• 65% are most concerned about protecting and growing deposits
• 59% believe fraud will be a top concern in 2024
• 58% believe staffing resources present the biggest challenge to digital business banking, while 46% believe feature function/competitive gaps and budget are cause for concern

2024 is expected to be a complex environment with economic uncertainty, the introduction of new payments, the modernization of old payments, and customer adoption of APIs and embedded banking. Bankers are responding with plans to invest in new technologies, prioritizing: 

• Real-time payments, with 63% of bank executives stating they are likely to add FedNow service to their payments’ portfolio
• FinTech applications, with 67% of bank executives open to introducing such applications, including NetSuite and QuickBooks, to customers
• API banking adoption, with 57% of bank executives believing API banking will provide impactful applications and connections

The banks are also cautiously moving more operations to the cloud, with 84% of banking executives saying their banks are already operating in the cloud, and of those not operating in the cloud (16%), 44% said their banks are planning a move to the cloud. While banks are moving some operations to the cloud, they are less inclined to move to a cloud-based model, with only 8% running more than 75% of operations in the cloud to date.