Key Survey Finds 75% of Banks Plan to Boost Their Investment in Risk Technology Infrastructure

There are many challenges that banks are facing today that they feel they cannot escape, including credit risk exposure, security and fraud threats, disruptions with technology, and interest rate volatility.

These concerns are causing uncertainty across many banks, and have even caused eight banks to fall since 2023.

To successfully tackle the increasing challenges, a global risk management survey conducted by FT Longitude in collaboration with data and AI leader SAS indicates two things, the first being that compared to 51% in 2021, 75% of banks plan to expand their investment in risk technology infrastructure.

The other major reveal from this survey is that compared to 43% in 2021, 64% of respondents intend to increase their spending on third-party software.

"Banks can no longer take decisions relating to liquidity, capital or credit risk in isolation," said Carlos Diaz Alvarez, Chief Risk Officer of Santander Portugal. "We can extract key information from separate systems to make holistic decisions, but we need more granularity and integration."

After gathering important data, the survey concluded that though AI shows promise, the use of it is not as widespread as was expected. SAS also found that there are increases in both risk technology capabilities (up 15% since 2021), as well as risk modeling (up 16% since 2021).

"With risks impacting financial institutions more interconnected than ever before, firms need a singular, AI-powered platform that allows them to evaluate risks across the balance sheet and perform more holistic stress testing," said Stu Bradley, Senior Vice President of Risk, Fraud and Compliance Solutions at SAS. "Those that replace outdated systems and infrastructure with a more integrated, enterprise-wide approach will see benefits across functions and enable better, more strategic decision-making."

The survey also concluded that banks of any size in any region are still struggling with their asset liability management (ALM) systems and their capacities, and want to strengthen them. Frameworks for efficient data governance and management are more important than ever.

"Our research finds that banks took some vital steps forward over the past three years to build resilience," said Thomas Sturge, Group Editor at FT Longitude.

"But they can't get caught comfortable. Ongoing turbulence means they must constantly modernize, improve and transform how they detect, manage and mitigate risk. Those that do will be rewarded not just with improved resilience, but also greater customer satisfaction and, ultimately, revenue."