Software company Temenos has released data revealing that technology is improving banks’ profitability and performance levels.

The results, part of the Temenos Value Benchmark Program, show that banks using Temenos software invest in front-to-back digitisation. As a result, these institutions have achieved cost-income ratios of 25.2%, double the industry average.

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Max Chuard, CEO at Temenos, said: “There is a trillion dollar profit opportunity for banks which move away from legacy systems to modern packaged software running on the latest cloud-native, cloud-agnostic, API-first technology.

“The case for digital transformation has never been stronger and the urgency for change has never been greater. The results of the Program show that Temenos clients are amongst the top performing banks in the industry. By transforming their end-to-end digital banking platform, they have been able to achieve industry-leading profitability levels. Meanwhile they are innovating faster and delivering exceptional digital experiences for their customers.”

The data also shows these clients also invest over 53% of their IT budget on growth and innovation versus maintenance. This is 2.5X the industry average.

Kanika Hope, Global Strategic Business Advisory Director at Temenos, said: “We launched the Temenos Value Benchmark, a unique program to provide our banking clients, tangible, data-driven insights and recommendations into their business performance, in the spirit of a true strategic partner.

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“Through our benchmark study, we collected thousands of data points around financial and operational metrics as well as qualitative best practices across the entire banking value chain, to understand how specific solution enablers and best practices drive high performance such as better cost-income ratios and improved returns on equity and assets.”

Drivers of high-performing banks

Results from the program show that banks that have undergone digital transformation are able to differentiate across:

  • Product innovation and growth
  • Customer centricity
  • Operational efficiency
  • Effective risk and compliance
  • Advanced analytics

Dan Dickinson, CIO at Equitable (EQ) Bank Canada, said: “A great example of the value I got from the Temenos Value Benchmark and why I would encourage my banking counterparts to participate in this program, is the metric I received on the very first page of the report: IT cost as a revenue percentage.

“This benchmark metric paid off immediately. It revealed to me the true cost of my IT and how I must continue to optimise and automate as I grow my customer base as Canada’s first digital challenger.”