Nearly four out of five bank operations leaders believe their financial institutions might not be around much longer if they don't update their technology, according to a new report by Accenture Research.

The professional services company, which surveyed 80 bank COOs, EVPs and other operations executives at small, mid-sized, regional and large banks in the United States and Canada in November and December 2017, found that 79% of the respondents worry their organization's existence could be threatened if they don't update technology to be more flexible and able to support rapid innovation.

“There's a wealth of unlocked value to be extracted from banks' operational systems, but releasing and optimizing that value depends on the bank's ability to use digital technologies,” Accenture Senior Managing Director Alan McIntyre said. “The challenge lies in the banks' legacy systems, which can impede a bank's ability to improve operations and prepare for the future.”

In fact, nearly 70% of banks believed their operations hold trapped value such as customer data that is not currently being accessed, and tapping that value will require better digital technologies, better front-line interfaces and better customer journeys, it said.

“COOs are aware of the challenges of digitization, and they are particularly concerned about the constraints that legacy systems place on the bank's ability to improve operations and be futureready,” Accenture reported. “Almost 40% of respondents said that their limitations of legacy systems are among the top three impediments to digital transformation.”

Not all financial institutions are operating in the technological Dark Ages, however. Nearly half of the respondents (48%) said their FIs already use cloud-based applications and another 27% plan to do so in the next year. Also, 22% are using artificial intelligence and 33% plan to do so in the next year, according to the study[TO4] . Robotic process automation was in use for just 16%, but 63% said they plan to use it over the next year or are experimenting with the technology.

Much of that technology is being used to improve the customer experience — a top priority for bank operations leaders, according to the survey results. Operations executives hope the technology helps them optimize the customer journey, core systems and organizational agility.

There's a consequence, however.

“Most banks (66%) feel that their banking operations are currently very well prepared to deliver on their strategic priorities over the next five years. However, delivering on those priorities will also require fewer staff, with slightly more than 60% of banks expecting to cut 10% to 30% of middle- and back-office positions in the next three years as they implement new technologies,” Accenture reported.

“With a new focus on performance measures like customer satisfaction and retention, existing back-office staff may be redeployed to other areas or asked to retrain to develop more front-office relevant skills. Digitization and automation will further alter labor demand, creating even greater need for high-skill talent in the back office,” it added. “Two-thirds of bank operations leaders expect they will need up to 30% fewer people in three years due to newly implemented strategies, and most banks (91%) agree that re-skilling will be required for remaining workers.”

Accenture also found that a little more than 20% of bank operations leaders are using freelancers or on-demand workers, and another 40% plan to incorporate them within the next year.

Changes will likely appear in the C-suite, too, according to the survey.

“The evolution of operations from a pure cost center to a hybrid that also contributes to top-line growth requires that COOs become more strategic in their outlook and approach to contributing to revenue growth. This shift also positions the COO to oversee a comprehensive digital transformation, and we are starting to see some banks head in that direction,” it said.

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Nearly 80% of Banking Execs Worried Old Tech Will Kill Their FIs

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