ATLANTA (1/30/15)--A sea of forces--investment, innovation and competition--could expand what credit unions, and other financial institutions, will spend on technology in 2015, according to a new report on technology expectations.
"Bankers as Buyers 2015," compiled by William Mills Agency, a financial public relations and marketing services company, could provide credit unions a glimpse into how they might mold their technology budgets, including in the realms of mobile technology, branch transformation and data security.
Based on the agency's forecast, 2015 sets up to be a busy 12 months. Scott Mills, president of William Mills, said the year will usher in a "perfect storm" of robust investment in fintech, competitive pressure from nontraditional financial companies and a wave of innovation.
"From all appearances, more investment is flowing into financial and payment technology companies than I've ever seen in my career," Mills said in the report, which received input from the Credit Union National Association. "Once considered too esoteric for many local and general business media, the fintech industry has become more mainstream.
"Without trying to sound too enamored with it, it is possible we will look back to this time as a golden age of innovation and the beginning of enormous operational change."
Perhaps more than any other area of investment, financial institutions will focus on mobile technology in 2015.
Experts widely agree that mobile is no longer an add-on, but actually should be the first consideration when planning a technology spending strategy, the report said.
Digital banking is the key to attracting and retaining customers, according to Javelin Strategy and Research.
"There will be more mobile banking users than Internet banking users in the next 18 months," said Robb Gaynor, founder and chief product officer for Malauzai Software Inc.
As credit unions and other financial institutions stay on top of new and evolving data security threats, meanwhile, budgets to ramp up technology to protect themselves likely also will expand in 2015.
Financial institutions were asked what their most pressing security concerns for the upcoming year were, and 75.4% listed data breaches at the top.
One area where financial institutions may look to spend more is on technology that requires multifactor authentication for high-risk transactions, according to Javelin Strategy and Research.
Only one in five U.S. financial institutions currently use this type of additional security, such as one-time passwords sent to mobile phones for secondary authentication.
In addition to mobile technology and data security, a number of analysts have said 2015 will be the year financial institutions actually transform their branches and the branch experience, after years of talking and planning.
IDC Financial forecasts that branch transformation, which includes the addition of video banking to automate human interaction, will climb 5% to 10% over the next 12 months compared with 2014.
Wincor Nixdorf AG predicts that by 2017, financial institutions will be spending $16 billion per year to transform their branches and incorporate all the necessary technology.
"With transactions moving to digital channels, the branches aren't as important as they once were, but they are and will continue to be important destinations for complex advice and for problem resolution," said Somesh Khanna, director at McKinsey and Co.
William Mills expects to see more of each of the following in 2015 as well: