Software technologies have allowed many industries to take advantage of these modern solutions to drive revenue and save money, yet banks remain tentative to leverage them, according to a report based on a Greenwich Associates research.
Financial institutions still hesitate to use the latest technology such as cloud computing due to seemingly insufficient resources, unfamiliarity with disruptive capabilities and the required expertise. Fortunately, there are ways to overcome these challenges.
The banking industry should consider investing in third-party partnerships such as software as a service (SaaS) to better understand financial statements, find ways to record a higher equity return than their capital costs and scout for new revenue opportunities.
By partnering with SaaS providers, financial institutions could maximize the benefits of the cloud. The report, which surveyed 69 capital markets firms, suggested that partnerships will be the key for the banking industry to be on track towards a bright future in terms of profit. More profit would mean better chances of expansion via mergers and acquisitions. In the U.S., six of the 60 bank mergers and acquisitions between April and June 2017 happened in Wisconsin.
M&A activity in the banking sector has become more of a growth strategy for mid-sized companies, instead of larger and more established firms. Wisconsin emerged as the top state in terms of M&A transactions due to its location, as the middle of the U.S. tends to have smaller banks, according to Rose Oswald Poels, Wisconsin Bankers Association president and CEO.
Aside from more banking laws, increased costs related to modern banking technology partly drove M&A activity in the state in previous years, Poels added.
Disruptive technologies will always be a concern for banks, although the promising benefits should serve as motivation to find ways on how to overcome these challenges for business improvement.