Eighty five per cent of global banks cite the implementation of a digital transformation programme as a business priority for 2018, according to a new EY report.

Investment in technology in order to drive efficiency, manage evolving risks and benefit from growth opportunities is seen by banks as critical for sustainable success, found the Global Banking Outlook 2018 study.

The survey of senior executives at 221 institutions across Europe, North America, Asia-Pacific and other emerging markets, showed that banks are seeking to become digitally mature, completing the transition “from regulatory-driven transformation to innovation-led change in order to insulate themselves from future downturns”.

However, the research fund that few banks (19 per cent) currently consider themselves as either digitally maturing or a digital leader, but more than half (62 per cent) aspire to be one of the two by 2020.

Six in 10 of the banks surveyed anticipated that their technology investment budgets will rise by more than 10 per cent in 2018. For banks that were beginning to invest or increase their investment in new technologies, 44 per cent planned to purchase the technology from a third party, while only 17 per cent planned to acquire an entity to onboard new technology.

Seven in ten banks cited strengthening their competitive positioning as a key reason for investing in technology by 2020, while enhancing cyber and data security was the number one digital priority in the survey, with 73 per cent of banks planning to invest in technology to mitigate cyber security threats.

Overall, addressing cyber security was this year’s top business priority globally across the banks surveyed (89 per cent), replacing last year’s top priority of managing reputational, conduct and cultural risks, which fell to sixth place in this year’s report. Recruiting, developing and retaining key talent also ranked highly (83 per cent), as financial institutions sought to integrate cyber experts into their organisations amidst a skillset shortage, EY noted.

Jan Bellens, EY’s global banking and capital markets deputy sector leader, added: “In order for banks to weather the performance challenges that lie ahead, they must prepare for a future led by innovation and technology. The pace of innovation continues to accelerate, and banks must have a strategy in place to ensure their implementation of new technology is effective.”