• Anders la Cour, co-founder and Chief Executive Officer at Banking Circle


• 21.09.2021 06:25 pm

As we continue to traverse the hills and valleys of the biggest period of business uncertainty the world has faced in a least a decade, Banking Circle has examined confidence levels among financial services CIOs and CTOs. Anders la Cour, co-founder and Chief Executive Officer of the innovative payments bank discusses the findings and how decision makers intend to futureproof their organisations.

In July 2021 we spoke to 600 Chief Technology Officers (CTOs) and Chief Information Officers (CIOs) at Banks, FinTechs and PSPs across the UK, DACH (Germany, Austria and Switzerland) and Benelux (Belgium, The Netherlands and Luxembourg) regions. Published in a new white paper: Futureproofing Payments Tech: The challenges facing CIOs and CTOs - the survey provides insights into the challenges currently faced by CIOs and CTOs across Europe, and what elements of their job are giving cause for concern. 

Despite global uncertainty continuing, CTOs and CIOs are generally optimistic about the future and how ready their business is to take on new market challenges. In all areas of responsibility, more of the CIOs and CTOs we spoke to reported feeling either ‘very’ or ‘fairly’ confident than ‘not at all’ or ‘not very’ confident. PSP and FinTech respondents were more confident in their readiness for the future than those working for Banks.

However, despite overall optimism, just one in three of the CIOs and CTOs went as far as to say they felt ‘very confident’ that their organisation is fit for purpose for the future in terms of investigation and procurement of new systems. And this was the area in which confidence was highest. 

Human resource concerns

The area where our respondents had the lowest level of confidence was recruitment; systems training wasn’t far behind. Banks were more concerned about recruitment, with 38% saying they were not confident the organisation was future proof in this area, compared with 29% of PSPs and FinTechs. This lack of confidence is a concern because 60% of our respondents intend to increase the size of their payments IT team in the coming year, with 38% planning to increase their budget in this area. 

Across Europe, Austria, the UK and Belgium are the most likely to grow their teams, with 91% of Austrian organisations expecting to add to the team, alongside 78% of both Belgian and UK firms. In contrast, 65% of German CIOs and CTOs intend to reduce the size of their teams.

One motivation behind taking on additional employees is the need to plug skills gaps. Whilst there may be a perception that FinTechs and PSPs are more likely to be ready to take on future market needs, all our FinTech respondents reported having skills gaps in their organisation. 

The most common gap was in Cloud skills, where 60% of FinTechs and PSPs lack experienced team members. Artificial intelligence (AI) and machine learning (ML) was close behind at 53%. Interestingly, though, when we asked which were the most crucial skills for their teams in the next year, just 39% of PSPs and FinTechs included Cloud skills in their top three; the same percentage cited AI/ML. 

It seems organisations may know they have a weakness in these areas, but they are not rushing to fix the issue, suggesting that they may not fully appreciate the opportunities the technologies can provide for boosting performance and improving customer experience.

Recognising the silver lining

Despite the rapid switch to digital that we experienced in the first half of 2020 as a response to nationwide lockdowns, as well as the increasing reliance on cloud-based technology in many areas of life and business, only slightly more than half of our respondents (56%) have at least half of their IT or Payments systems in the Cloud. 

Perhaps contradicting the common perception that banks are mired in legacy systems, they are in fact more likely than FinTechs and PSPs to have their IT and Payments systems in the cloud. 60% of banks have at least half of their payments systems in the cloud; 52% of FinTechs said the same. It was also interesting to see that despite being young companies, lacking the legacy systems that can hold Banks back, none of the FinTechs and PSPs we surveyed have 100% of their payments systems in the cloud and less than 1% have entirely cloud-based IT systems. Clearly a good deal of hesitation remains.

Digitalisation and moving to the Cloud involves a huge investment from the Financial Institution. Working with a cloud-based partner to solve the issue can be a more cost-effective way to future-proof the business. Systems can be moved to the cloud quickly, without rebuilding the bank or FinTech’s infrastructure - or retraining the entire IT team. Indeed, for Banking Circle, being cloud-based enables us to tweak, improve or replace our solutions quickly and easily without impacting the rest of our platform or other solutions. This allows us to adapt to new client needs, whether by updating an existing solution or building an entirely new product from the ground-up. However, our research shows that Banks and FinTechs still have a surprisingly long way to go before they are truly cloud-based and able to be as responsive and flexible to meet their clients’ needs.

Focusing on futureproofing

When we asked our survey respondents where they plan to focus their efforts and budgets in the coming year, the most common High Priority was improving data quality (44%). This was closely followed by migrating to digital delivery of services (43%) and improving the customer experience (42%).  

The biggest internal challenges standing in their way are a lack of integration with customer-facing departments (49%), a lack of data consistency between internal systems (45%), and a lack of consistency across countries' operations (45%). 

In terms of external challenges, the most common across all respondents was the inconsistent regulations across geographies (31%). Clearly, consistency and integration must improve to increase efficiency and remove payment pain points. Partnerships with the right external providers could help resolve these issues quickly and simply.

Whilst consistency and integration are significant business challenges for our CTOs and CIOs, these are not the issues keeping them awake at night. 

For FinTech CIOs, the main issues are tech outages (13%), staff skills (13%) and staying up to date with market developments (12%). For Banks, the main concern was a digital transformation project (17%), followed by getting internal support for tech investment and staff skills (15% each).

Working in partnership with external providers like Banking Circle can spread the load and ease the burden on CIOs. Skills gaps can be filled by the third party expertise rather than through in-house recruitment. Digitalisation is achieved far more quickly and without the need to rebuild an entire infrastructure. And the latest purpose-built tech is instantly available without years of internal development and investment.

Banks, PSPs and FinTechs alike are working tirelessly to bring about a rapid transformation of their businesses by digitalising their services. To speed up the process and deliver market-leading solutions, Financial Institutions should consider collaboration with a payments bank or financial utility that can take on a lot of the heavy lifting and reduce stress on any one individual or team. Maybe then the invaluable CIO or CTO will rest easy at night.