US community banks give insight into technology spending plans

Protecting customer data security ranks as the top technology priority for 8 out of 10 US community banks, reveals a study conducted by the Independent Community Bankers of America (ICBA), an industry body representing nearly 5,000 community banks which in total boast assets of $908 billion.

Protecting customer data security ranks as the
top technology priority for 8 out of 10 US community banks, reveals
a study conducted by the Independent Community Bankers of America
(ICBA), an industry body representing nearly 5,000 community banks
which in total boast assets of $908 billion.

Backing their commitment to ensure data
security 57 percent of community banks surveyed by the ICBA
indicated that they would increase their spending on
security-related technology over the next two years. In addition,
51 percent of respondents indicated that they would be increasing
spending on fraud detection.

However, measured in terms of total
non-interest expenditure (NIE) spending on technology varies
considerably.

According to the survey’s results, for 44
percent of community banks technology expenditure represents 9
percent or less of NIE, for 43 percent between 10 percent and 24
percent and for 3 percent more than 24 percent.

Surprisingly, 10 percent of respondents said
they did not know how much technology spending represented of their
NEI.

Also somewhat surprising is that while 89
percent of community banks have an online service, the proportion
offering electronic bill payments functionality is limited.

This is especially true of small banks (assets
under $100 million) with only 54 percent offering online bill
payment functionality to private customers and 18 percent to
business customers.

Among large community banks (assets over $500
million), the situation improves with 80 percent offering online
bill payment functionality to private customers. However, this
service is offered to a mere 18 percent of business
customers.

In their defence, many community banks operate
in generally less tech-savvy agricultural and small business
markets. Notably, only 5 percent of respondents reported that more
than 51 percent of customers with demand deposit accounts were
registered for internet banking.

A further 35 percent reported internet banking
uptake of 21 percent to 50 percent and 31 percent reported uptake
of between 11 percent and 20 percent.

By and large community banks are also not
rushing headlong into the world of mobile banking.

According to the survey only 11 percent of
respondents currently offer mobile banking to their customers while
a further 30 percent plan to increase their technology spending for
mobile banking over the next two years.