Banks are technologically two decades behind, says Barclays data chief
Banks' technology is old but their size makes adopting innovation a long and complicated process, Barclays chief data officer, Usama Fayyad said on Thursday.
Speaking at a business conference in London, Fayyad said the banking industry was at risk of becoming a "boring business".
"Banks are 10 to 20 years behind in terms of technology," said Barclays CDO.
"We need new skills and new technologies and we need changes to happen quickly in what is a decreasing margin environment."
As member of a panel addressing the theme of harnessing change in financial services, Fayyad said the so-called "Fintech" revolution will not spell the end for traditional banking institutions, but could make turn them into a business that was no longer appealing.
"The question isn't whether banks are gonna die as a result of technology innovations," he said.
"The question is 'Can we make the banking business interesting?'"
His concerns were echoed by SWIFT chief executive, Gottfried Leibbrandt, who stressed that while the emergence of new technologies in the financial service industry will not bring the curtain down on so-called "legacy banks", traditional institutions ran the risk of being left behind.
"To an extent we need bank to be conservative, particularly given what happened in 2008," he said.
"However we also want banks to change and while the financial sector revolution will help them their innovation, it's not something they should be taking for granted."
In the aftermath of the financial crisis and of the huge fines handed out by the regulators, a number of banks have placed greater emphasis on transparency and on a more technological approach aimed at delivering a better service to their customers.
However, the emergence of new technologies, such as instant payment system and bit currencies, highlights the gap to bridge remains sizeable.
"The gap between where we are as banks and where the technology is at is no longer excusable."
"The gap between where we are as banks, and where technology is at is no longer excusable," said Fayyad.
"It might have been excusable 20 years ago not anymore."
Barclays' CDO warned that unless the banking industry was prepared to implement the latest technological innovation in its day-to-day operations, it risked to follow the path of many other industries that have failed to modernise in time.
"Look at the newspaper industry," he added.
"Publishers had two decades to be prepared for one of the biggest changes the industry had seen - the switch from print to digital - and they were not ready for it when it came."
However, others believe that while banks should focus on remaining ahead of the curve, their status means they'll not disappear even if they fall behind in terms of technology.
"Banks are heavily regulated and there's a legacy they can't escape from," said Daniel Marovitz, President of Earthport's European operations.
"It's difficult to have innovation in such large organisations and banks should co-operate with small, more technologically advanced, out-sorcing companies.
"Banks shouldn't see the 'fintech' revolution as a danger."
Marovitz' stance was shared by Craig Donaldson, the chief executive of Metro Bank, who said banks had to embrace technology and shift towards become more specialised.
"For too long banks have stretched their resources too far, putting themselves at risk in a bid to cover all the basis," he said.
"Banks trying to do everything will not survive, while those capable to focus on a particular niche will as customers will be more inclined to do business with them."
"Banks trying to do everything will not survive"
However, while the number of challengers banks and lenders that tend to focus on a small number of customers has grown exponentially over the last few years, some still believe banks should not scale down on the number of services they offer to their users.
"Banks shouldn't specialise, as people want organisations that sell everything," said Christophe Chazot, group head of innovation at HSBC.
"Look at the likes of Amazon, offering everything customers want.
"At times it's manufactured by Amazon, at times it's only sold by them and that's should be the way forward for the banking industry as well."