total investments in digital tech in 2015
The total amount of investments in digital technology reached a $19bn in 2015, compared to $1.8bn in 2010, according to Ronit Ghose, the global head of banking research for Citigroup.
He stated in his opening speech during the fourth Citibank conference in London that more than 70% of these financial investments in digital technology is focused on the field of payment services in the banking sector.
“This sector is witnessing major competition between global banks in the new markets, such as the Paypal service for commercial payments in the US, and the small and emerging companies funded by banks that started growing in global markets on a wide scale,” Ghose said.
He added that even though banks predicted the old banking system to become extinct, only 1% of the banks in North America have shifted to the new digital investment. He explained that digital technology financing companies have a new advantage for growth and innovation, where US and Europe have not reached the point where they start making profits and achieve growth within the sector until now.
He went on to explain that China has done well in this field, and gained a large share of the market of electronic payment and payment services, achieving noticeable growth in its profits compared to the traditional banking services of payments.
With advancement in technology, the relation of clients with their banks and money has changed, where clients now rely less on visiting bank branches to take care of their banking transactions, as they now have digital options to help them, such as using ATMs, the internet, mobile phones or online banking services.
Ghose explained that digital technology is not considered an added value for customers in the field of banks and financial institutions, and it is also a turning point and a major change in basic banking around the world.
“The more clients use digital solutions, the more banks and banking institutions will need to reconsider their digital technology solutions,” Ghose said, adding that the international economy must rely on the next decade’s ability to allow competition through reducing the banks’ branches and targetting new strategic channels that reach different client segments.