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2021 Technology Survey: Tracking Spending and Strategy at America’s Banks

2021 Technology Survey: Tracking Spending and Strategy at America’s Banks

Just Released! Bank Director’s Survey Explores Rising Technology Budgets, the Competitive Landscape and Digital Evolution

Community bank leaders report that they’re spending more on technology in 2021, in response to the global Covid-19 pandemic as well as rising competitive pressures from big banks, technology companies and emerging startups.

Banks increased their technology spending by a median 10%, according to Bank Director’s 2021 Technology Survey, sponsored by CDW. More than three-quarters of responding bank executives and board members say that their technology budget for fiscal year 2021 increased. Still, the survey revealed widespread concerns that banks aren’t serving younger generations well or handling data effectively. Conducted in June and July, the survey explores how banks leverage their technology investment to respond to competitive threats, along with the adoption of specific technologies.

“Those surveyed budgeted an overall median of almost $1.7 million in FY 2021 for technology,” says Emily McCormick, Bank Director’s vice president of research. “That’s significantly less than megabanks such as JPMorgan Chase & Co. and Bank of America Corp., both of which spend more than $10 billion annually on technology. Community banks will need to think outside the box and leverage available resources — internal and external — to make the most of their budgets.”

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Technology spending totals a median 1% of assets for surveyed banks, but smaller banks with less than $500 million in assets are spending more, at a median 3% of assets. Further, larger banks with more than $1 billion in assets spend more on expertise, in the form of internal staffing and managed services. A median 40% of technology budgets go to core systems.

Despite increased competition from outside the traditional banking space, respondents consider local banks and credit unions (54%), and/or large and superregional banks (45%), to be the greatest competitive threats to their bank. More than a third say they’re worried about digital payment providers such as Square, which launched a small business banking suite shortly after the survey closed in July.

“The increase in technology spend as a response to Covid-19 and an evolving competitive landscape aligns with what CDW is seeing with our customers in the financial marketplace,” says Scott Hiemstra, a sales director who leads the financial services team at CDW. “Digital transformation has come to the forefront as banks and credit unions adapt to a hybrid work environment and focus on improving the customer experience, all while keeping security top of mind. Agility and flexibility are more important now than ever and prioritizing the investment in technology is the only way forward.”

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Key Findings Include: 

Digital Evolution Continues

Fifty-four percent of respondents believe their customers prefer to interact through digital channels, compared to 41% who believe their clients prefer face-to-face interactions. Banks continued to ramp up their digital capabilities in the third and fourth quarters of last year and into the first half of 2021, according to the survey.

Data Dilemma

One-third upgraded or implemented data analytics capabilities at their bank over the past four quarters, and another third said these capabilities were already in place. However, more than half say they’re concerned the bank isn’t effectively using and/or aggregating its data.


More than 40% say their bank’s leadership team has discussed cryptocurrency and are weighing the potential opportunities and risks. A quarter don’t expect cryptocurrency to affect their bank; a third haven’t discussed it.

Serving Digital Natives

Are banks ready to serve younger generations? Just 43% believe their bank effectively serves millennial customers, who are between 25 and 40 years old. But most (57%) believe their banks are taking the right steps with the next generation — Gen Z, the oldest of whom are 24 years old. It’s important that financial institutions start getting this right: More than half of Americans are millennials or younger.

The survey includes the views of more than 100 independent directors, chief executives, chief operating officers and senior technology executives of U.S. banks below $100 billion in assets.

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