What is the reason for banks’ big spending on technology?

Technologies have been causing more and more disruptions in the world of banking in the last few years. And while some people could be frightened by the pace of innovation, others should be really cautious not to be left behind. That is why banks have started to invest heavily into tech development, some on a really unparalleled scale. Let’s take J.P. Morgan as an example. The bank has found $11 billion for the tech investment program.

Meanwhile, the banks are also outsourcing a big chunk of their work. This is really beneficial for everyone, as the smaller tech firms can find a platform to develop (and a really influential client and partner), while the banks do not have to worry about developing the right structure. One of the companies that are being delegated to such various tasks, is Fusion Risk Management.

Operational resilience

It’s important to get familiar with the ‘operational resilience’ term. And although it may sound a bit like an empty concept made up after the 2008 crisis, it really is not. As it appears, it is a really crucial element of planning one’s business, especially in bumpy and troubled times.

Bank of England defines it as the financial system and firm’s ability to not only recover from shocks but rather absorb them, and adapt to them without any discontinuances in the service provision. The institution shall have plans and scenarios allowing it to deliver its services, no matter the disruption’s cause.

The system is still able to develop when left unchecked, but it may go in unwanted directions. Thus, it may become exposed to different shocks. To ensure the safe evolution of it, the public authorities are holding a responsible role. Their task is to make sure the market is ready for different disruptions and shocks.

To read the fascinating Disruption Banking piece by Benjamin Jenei on this matter, and the future of banks’ technological involvement, use the following link and access his article: https://disruptionbanking.com/2021/04/19/why-are-banks-spending-so-much-on-tech/.

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