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Bankers around the world are signaling a change in strategy. While cost optimization remains the top priority, compliance with regulations and innovation that strengthen their competitive advantage are gaining importance. This comes against the backdrop where AI is as important as cybersecurity in banks and recruiting AI talent is considered the most difficult. These findings are among the insights revealed in the fourth edition of the Infosys Bank Tech Index.
Efficiency remains in play, but compliance and innovation score points
Globally, banks focused on cutting costs last year. Until recently, U.S. banks turned to cost optimization as they faced a liquidity crisis caused by a deposit flight, which drove down their costs. net interest marginseven during non-performing assets were flowing.
Regulatory compliance has become a top priority for banks as they navigate an increasingly complex regulatory landscape linked to AI, resilience and open banking. Banks continue to invest in technologies and processes designed to ensure compliance with regulations, protect their operations and build customer trust.
On the other hand, innovation is driven by the need to remain competitive in a rapidly changing market. Infosys Bank Technology Index highlights the importance of innovation to drive growth and differentiation. For example, Citi Bank has adopted blockchain technology for cross-border payments, significantly reducing transaction times and costs.
Additionally, the interplay between innovation and compliance is reshaping the future of banking technology. While innovation fuels growth and differentiation, compliance ensures stability and reliability. Banks are increasingly investing in technologies that enhance their capabilities and ensure compliance with regulatory standards. This balanced approach is crucial to navigating the complexities of modern banking.
Talent is hard to find
Qualified talent is in short supply and competition for this talent has intensified. In Europe, almost half of companies are struggling to recruit people with proficient STEM (science, engineering, technology and mathematics) talent. In the United States, 45% of STEM employees with PhDs are foreign-born. Australia illustrates this challenge; the country aims to train 1.2 million tech workers by 2030, but is currently short about 160,000 people. qualified professionals.
Banks are struggling to find the right talent in this competitive market. They are competing with each other, fintech companies and big tech companies to fill this limited talent pool. While historically, factors such as bank size and longevity determined customer loyalty, today’s customers prioritize convenience and digital excellence. To meet these expectations, banks must continually innovate while effectively aggregating and analyzing data.
Building the right tech stack, however, requires talent with varied expertise – and this can be difficult to scale and scale to meet demand.
Partnership for better results
Banks are turning to continuous learning initiatives and strategic partnerships to bridge the talent gap and effectively drive innovation. For example, Barclays Digital Eagles Program aims to develop employees in the areas of digital and cybersecurity. Such platforms can provide employees with ongoing access to the latest training resources, allowing them to stay informed in the rapidly evolving areas of AI and cybersecurity. These platforms can be tailored to the specific needs of the bank, ensuring that employees receive relevant and practical training. Another example is ANZ Bank. The bank plans to train 3,000 executives on accelerating large-scale AI adoption at its new AI Immersion Center. While training is a great way to fill the talent gap, developing a training program and training employees requires resources and time.
Partnerships also play a crucial role in enabling banks to quickly adopt new technologies while mitigating associated risks. Collaborations promote the cross-pollination of ideas between diverse teams, driving innovation through shared expertise. Infosys was formed during 250,000 employees across various departments in Generative AI – an initiative that illustrates how diverse skill sets can lead to richer outcomes, tailored to the needs of society. In addition, banks are increasingly using specialized companies to meet specific technological needs; for example, a bank partnered with a cybersecurity firm to effectively validate its AI systems against regulatory guidelines.
The central role of AI
The subtle shift from cost optimization to regulatory compliance and innovation reflects broader trends that are reshaping banking strategies across regions. Increased investment in AI technologies, coupled with challenges in recruiting talent, requires a comprehensive approach that prioritizes training and collaboration.
Banks that adopt an AI-driven strategy see stronger results. By integrating AI into their operations, these institutions can achieve continuous cost transformation while simultaneously improving regulatory resilience. Early adopters such as DBS Bank in Singapore reported improved operational efficiency and agility, enabling them to seize growth opportunities driven by market fluctuations while ensuring regulatory compliance.
For banks to manage the trinity of costs, compliance and innovation, they must adopt a balanced approach that integrates technological advancements with strategic workforce development initiatives.
A culture of continuous learning combined with partnerships can position banks for sustainable growth while maintaining customer trust in an increasingly complex regulatory environment.
About the author
Senior Vice President and Head of Financial Services Industry in Europe, Middle East and Africa
Jay Nair is Senior Vice President and responsible for the financial services industry in Europe, the Middle East and Africa. Additionally, he also leads the UK utility business for Infosys. He is also part of the supervisory board of Stater (which is the largest independent full-service provider for the mortgage market in the Benelux). He is based in London, United Kingdom. He has spent almost three decades in engineering, both in process control engineering and since 1999, within the BFSI (Banking, Financial Services and Insurance) sector. Jay has extensive experience in business and technology consulting, practice development, engineering and management of large-scale enterprise-wide technology programs. He has led global teams and programs in the Americas, Europe, India, China, Latin America and Asia Pacific. He has advanced degrees in software engineering and business management.
