Mature man giving a big data presentation on a tv in a board room. There are several financial graphs and charts on the screen with a diverse group of people in the meeting room. There is paperwork and technology on the table

Five questions banks must ask to turn technology spend into value

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7 minute read 30 Mar 2026

Technology budgets are increasing globally but investing for long-term strategic growth remains a challenge.

In brief
  • The biggest banks on average spend more than US$4b a year on technology, with much of that focused on near term returns.
  • A lack of relevant data, legacy technology maintenance and skills shortages stifle innovation and the ability to demonstrate value from investments.
  • Even when banks innovate successfully, a lack of ROI insight and poor communication make it hard for investors to distinguish activity from impact.

From the introduction of the ATM in 1967 to today’s advances in agentic artificial intelligence (AI), technology has been instrumental in transforming financial services. During that time, customers have come to expect innovations such as mobile banking, digital payments systems, blockchain-enabled services and robo-advisors.

Given technology's proven ability to transform banking, it would be reasonable to expect financial institutions to consistently direct investment toward strategic innovation. In practice, many banks find this difficult, mainly because of the way technology investment decisions are structured and evaluated.

New research by the global EY organization examining how 25 major financial services institutions across the Americas, Asia-Pacific and EMEA manage technology spend shows that, despite increasing investment levels, most banks still struggle to prioritize and finance long-term transformation. A major factor is the difficulty in measuring and demonstrating return on investment (ROI) from technology initiatives, alongside the challenge of building a credible narrative that links tech spend to strategic outcomes – which is needed to attract new funding.

Addressing the disconnect between the banking sector’s enormous tech spend and its effectiveness in achieving long-term transformation isn’t insurmountable; it just needs a systemic approach to measuring value and creating the structures needed to achieve success. We believe these five questions can help kick-start that process.

1. Do we have a governance framework that prioritizes projects based on strategic alignment rather than immediate returns?

According to the latest EY CEO Outlook, 97% of banking CEOs expect their institutions to deliver improved revenue and profitability in 2026, and a third of those expect significant growth. They’re heavily focused on improving customer engagement and retention, operational optimization and productivity and traditional cost-cutting.

These priorities filter down throughout the enterprise. In our research, the largest global banks spend on average more than US$4b on technology each year but more than half of that (58%) is devoted to short-term run-the-bank (RTB) activities while nearly a third is swallowed by mandatory change and compliance budget. That leaves just 12% devoted to achieving strategic change.

The world’s largest banks spend over US$4b a year on technology — yet only 12% goes to strategic change.

One practical starting point to counter this short-termism is to examine leadership incentives — do they reward long-term strategic outcomes, or reinforce risk‑averse, short‑term decision‑making? Establishing “trailing” ROI reviews 18, 24 and 36 months post-launch of new technology also can demonstrate the real and hidden value to the enterprise.

2. How do we free up more of our tech budget for strategic investment?

The short-term focus on growth has a direct impact on banks’ ROI expectations — 50% typically looked to recoup on technology investments within 18 months, while every bank we studied expected payback within 36 months. As a result, multiyear projects rarely get funded as most budgeting processes prioritize quick wins (notably rapid cost reduction) over long-term bets. That’s despite CEOs expressing confidence that technology-led transformation will deliver growth. Over the last five years, fewer than one in three banks have approved 10 or more projects with payback periods of more than 36 months.

While prioritizing RTB investments is both necessary and understandable, a more strategic way of assessing longer-term ROI is required. Banks currently struggle to embed both qualitative and quantitative measures in their ROI assessments — 88% say that unclear ROI makes it tough to get multiyear projects approved, and just 43% always consider strategic alignment with business objectives when calculating ROI on technology projects.

Fewer than one in three banks have approved 10+ projects with payback periods beyond 36 months.

How EY can help

Challenging traditional annual budgeting processes to champion transformative initiatives is a good first step in balancing tech spend priorities. Developing a strategy to automate more daily processes and identify who in the organization most resists RTB cost reduction and what is their incentive to maintain the status quo will also show where budget can be better utilized.
 

3. How are we ensuring that our transformation plans are realistic and account for the complexities of legacy system integration?

The need to maintain aging infrastructure (and the complexity of connecting and managing new and old systems) is another undermining factor in banks’ inability to free up capital for investment. More than 80% of banks cite their legacy systems as preventing them from reducing RTB spend, while 86% say those same outdated systems are the primary cause of IT project failures.
 

Weak business case projects also can cause executives to question future strategic tech funding. This is often compounded by a lack of meaningful data when measuring the ROI of tech investments against business case expectations. Three-quarters of banks that back-test ROI projections fail to do it robustly because they rush evaluations after project completion, while 60% admit that inconsistent data quality and limited data access make it hard to accurately assess ROI.

One approach should be to pinpoint the specific products, processes, or customer experiences that are suffering because of legacy tech. Another is to build robust business cases for legacy retirement that quantify long-term savings and risk reduction.
 

4. How are we future-proofing talent within the organization so we have the skills needed to take advantage of innovative breakthroughs?

The recent CEO Outlook demonstrated just how confident banking leaders are about the value of AI with 81% saying those investments have already delivered more value than anticipated. Yet all banks face serious talent challenges as they battle with other sectors to recruit the right people. To compensate, banks increasingly want to prioritize re-skilling the existing workforce but find themselves confronted by internal skills shortages, particularly in cybersecurity and generative AI (GenAI). More than two thirds of banks (71%) identify these as critical gaps in their workforce — making it harder for them to both deliver transformation and demonstrate its value.
 

Fast-tracking internal re-skilling and upskilling and redeployment programs in GenAI and cybersecurity to address urgent capability gaps is a critical step. Banks should also consider creating a system that incentivizes senior engineers to mentor junior talent rather than focusing solely on their own deliverables as one effective approach.

5. Are we doing the best job sharing our innovation progress with the board and external stakeholders?

Even when banks are making genuine progress on technology-led change, they often struggle to translate that effort into a credible innovation narrative for investors — creating a disconnect between what’s happening inside the organization and what the market can see. Closing this gap requires more rigorous ROI insight and clearer communication of strategic outcomes — so boards and markets can distinguish activity from impact. EY research found that one leading bank introduced just 11 externally visible innovation products – solutions spanning areas such as payments, digital modernization, data-driven customer experiences, cybersecurity, cloud and AI-enabled capabilities – between January 2023 and March 2025, despite filing more than 2,000 patents over the same period. This highlights how perceived innovation leadership may not reflect underlying research and development activity, and how easily technology investment can be misread when outcomes and storytelling don’t keep pace.

One leading bank launched just 11 innovation products — despite filing over 2,000 patents.

By linking tech spend to strategic outcomes, banks can translate innovation efforts into clear value narratives for investors. They also need to do a better job sharing and communication innovation progress with the board and all external stakeholders.

Summary

Banks are investing more in technology than ever before, yet much of that spend remains tied up in RTB activities, short- term ROI expectations and legacy constraints. Governance models, funding processes, data limitations and skills gaps make long–term transformation difficult to sustain. Without clearer alignment between technology investment, measurable outcomes and effective communication, rising spend risks delivering incremental change rather than strategic value.

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    EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.