The recent CIO Survey by Couchbase, the innovative NoSQL database company, found that financial services spent twice the industry average spend on digital transformation in the last 12 months, or $42m compared to the average $24m.
The reason may be that financial services CIOs are investing in the wrong things, according to Jes Breslaw, Director of Strategy EMEA at Couchbase.
The survey also found that the financial services sector plans to spend an average of $45m in the next 12 months, or two thirds more than the average across all industries of $28m.
A staggering 88% of financial services CIOs have had a digital project fail or reduced in scope due to the cost of making changes to legacy technology, or be significantly delayed because their legacy database technology couldn’t support it, with 28% blaming slow innovative database adoption on the restraints of legacy databases.
A worrying 58% said that their organisations were so fixated on the need for digital transformation that it risks rushing into projects that won’t produce the results needed.
“It’s a perfect storm,” says Breslaw. “Financial services have got huge pressure to innovate as well as heavy reliance on legacy databases. At the same time they have an unprecedented level of regulation with which to comply and that’s before we mention the growing threat of sophisticated cyber attacks.”
But the real killer is having to compete with disruptive fintech startups as well as the tech giants, unencumbered with legacy technology and setting the standard for new technology. “Banks are now expected to invest in biometrics, augmented reality and AI. It’s a case of learning to walk before you can run,” says Breslaw.
For Breslaw, there are two approaches to innovation: innovate because you have no choice, or innovate because you have the luxury of choice. That’s where companies have tough decisions to make.
“A good example is Nationwide,” says Breslaw. “The building society just announced a further £1.3bn investment into the digital transformation fund. However, if you look at the details of that investment, it covers everything from modernising physical branches and moving away from legacy systems - is that truly digitally transformative at a scale and speed that will have an impact?”
Overall, Breslaw remains optimistic about the financial services’ appetite to find new ways around existing problems.
“This survey acts as a reality check for CIOs,” says Breslaw. “It gives them the opportunity to step back and evaluate where they are and refocus digital projects. Digital transformation isn’t all about making it pretty on the front end, in fact, more should be done to build a scalable and automated infrastructure in the backend that unlocks innovation for the rest of the business.”