Many traditional banks are unable to invest in innovative new technologies, as they can only concentrate on plugging holes in their balance sheets, according to an analyst at Citi.

Speaking at the Money 20/20 Europe conference, Ronit Ghose shared insights from his work on assessing today’s banking industry for Citi’s Bank of the Future research.

“It takes a long time to change the 1960s technology some banks are based on, as well as to operate with the complicated business models across products and geographies that have developed over time,” he commented.

“But perhaps most importantly, do they even have the ability to invest? Many need to fix balance sheet today, let alone think about the future,” added Ghose.

“After the last financial crisis, bank CEOs focused on avoiding spending huge amounts of money on regulatory fines, so missed investment opportunities in new technologies and have subsequently fallen behind newer players.”

Ghose said that until relatively recently, the big banks could rest easy, as their dominance in terms of client base vastly overshadowed challenger startups, but the rapid growth and efficient onboarding of some FinTechs in the last few years has forced them to take notice.

The Citi research found that European banks in particular have fallen behind counterparts in the US and Australia in the last few years, in terms of tech spending in relation to overall spending, with that figure only now starting to increase.

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