Italian banks are trailing behind their European counterparts in technology investments, the Bank of Italy stated on Friday, urging lenders to increase spending to foster innovation in financial services. Despite a four-fold increase in technology investments since 2017, these efforts remain insufficient, Bank of Italy Governor Fabio Panetta remarked during the presentation of the central bank’s annual report.
“They need to grow: it would be a serious mistake to continue to fall behind in this area,” Panetta stressed. He highlighted that banks with a stronger digital presence are better positioned to diversify revenues and expand their market share in lending.
Italy’s largest bank, Intesa Sanpaolo (ISP.MI), plans to invest 5 billion euros ($5.4 billion) in technology from 2022 to 2025. This investment aims to transition to a cloud-based core banking IT system, which has already been successfully tested at a new digital bank. In contrast, Italy’s second-largest bank, UniCredit, which outsourced its IT infrastructure a decade ago, targets 2.8 billion euros in tech spending from 2022 to 2024. By comparison, Spain’s largest bank, Banco Santander (SAN.MC), announced in 2019 its intention to invest approximately 20 billion euros in digital and technology.
The Bank of Italy has intensified its monitoring of IT outsourcing contracts, including conducting on-site inspections. Panetta noted a significant rise in serious cyber incidents reported by financial institutions last year, attributing the increased risk to geopolitical tensions and state actions. “The financial sector is an attractive target, given its dependence on digital data and procedures,” he added.
Emphasizing the importance of technology in driving cost savings and reducing service charges for customers, the Bank of Italy pointed out that online account costs average 60% of traditional account costs. However, Panetta also urged banks to leverage technology to enhance service quality and product offerings, thereby improving their reputation and client relationships, which he described as their most valuable assets.
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