The Future Of Banking Requires Tech-Driven Innovation
According to Forrester’s Future Fit Survey, 2022, 77% of business and technology professionals at banks anticipate increasing their spending on emerging technologies over the next 12 months. Emerging technologies could mean the difference between gaining, retaining, or losing competitive differentiation. Yet failure remains commonplace. Only a quarter of business and technology professionals whose organization has one or more central emerging-technology functions reported that 76% or more of the projects their organization undertook were successful.
A recently published Forrester report analyzed emerging technologies for banking in the context of different time horizons: Will they deliver business value within the next 12 months, within the next two to four years, even later, or maybe never? We found that some:
- Will deliver positive ROI in the next 12 months. Low-code belongs here, but obstacles remain. Low-code brings opportunities (such as citizen developers helping organizations tackle the developer shortage and boosting development speed) but also challenges (such as governance and compliance).
- Can deliver positive ROI in the next two to four years. One of the technologies in this category is blockchain: Its theoretical benefits are manifold, but in practice, they’re hard to realize. While we’ve seen some initiatives deliver benefits today, many may never bear fruit.
- May deliver positive ROI five-plus years in the future. The metaverse, for example, is in the spotlight but will deliver ROI in the far future (if at all). Many banks discuss the metaverse today with a view to experimenting, and more banks are trying to understand its potential, but banking use cases that create rich customer value don’t exist today.
To minimize the chance of emerging tech projects failing, banks must carefully assess the potential value of (frequently overhyped) technologies as well as the real value of technologies that are no longer regarded as emerging:
- Banks should be wary of technologies with unproven and uncertain value. Quantum computing is an example of a technology that has yet to mature, with the potential business value for banks remaining unclear. Spatial computing and augmented and virtual reality are examples of emerging technologies that are applicable only to a few areas of banking today.
- At the other end of the spectrum is a set of technologies that has lost the “emerging technology” label — at least for leading banks. Banks with the necessary resources and skill sets use event-driven architecture, service mesh, microservices, and real-time/predictive analytics in operational environments today.
There are plenty of tech toys that can distract and keep banks from more pressing tasks. Do you want to gain deeper insight about all emerging technologies that made it to the list for 2023? Check out our latest report, The Top Emerging Technologies In Banking In 2023 (behind the Forrester paywall). Got a question after reading this? Click here to book an inquiry.