fintech investments reach 1.88 billion

The expense for investments in innovative technologies of banks and financial companies amounted to 600 million euros in the two-year period 2021-2022 and is estimated at 901 million for the two-year period 2023-2024. Further expenditure of 380 million is expected starting from 2025, until the projects are completed. Overall, the expenditure connected to the identified investment projects amounts to 1.88 billion euros.

This was revealed by a biennial survey by Bank of Italy which involved the entire banking system and 67 non-banking intermediaries, selected on the basis of operating volumes and the particular business model adopted.

Increasingly targeted investments

The expense refers to a total of 430 investment projects, 63% of which are totally new and represent 56% of spending with a lower weight of the number of projects and spending compared to the previous survey. Therefore, alongside a clear expansion of the new resources allocated, there is a sign of consolidation of the initiatives, measured by the lower number of new projects.

The digital transformation process of the financial system, although expanding, is quantitative limited and polarized. In relation to the expenditure for the purchase of software, hardware, technological systems and for the operation of IT systems, the fintech expenditure of the banking system was on average equal to 5% in the two-year period 2021-2022. Furthermore, the share of spending attributable to the top 10 investors grew further, reaching 87.5% of the total.

The technologies used

The main technologies characterizing the projects were the platforms web-mobile (20.5%), artificial intelligence – AI (16.5%) and the Application Programming Interfaces – APIs (14.9%).

Compared to the previous survey, it is increased both the number and the expense of projects based on web-mobile platforms, AI, digital signatures, DLT and big data.

I am decreasedhowever, in terms of number and value the projects connected with the API and biometric technologies. Projects related to cloud computingdespite becoming fewer in number, have grown in terms of spending.

The results on the various areas

The impact of spending on fintech technologies in relation to operating costs and the impact on revenues expected on the intermediation margin remain limited and in no business area do they surpass 1%.

The business areas who attracted them more resources those were economical of intermediation and payments, with investment shares equal to 43.7% and 39.4% of the total respectively. The most important projects in the intermediation area had as their main objective the digitalisation and automation of the credit process: from the loan request to its disbursement up to the possible management of problem and non-performing loans (digital lending). In payments, the most recurring innovations concerned instant payments and the integration of payment instruments within digital wallets.

In terms of number of projects the prevailing area is that of operationswhich represents a quarter of the projects. Projects related to operations, based mainly on AI and Robot Process Automation (RPA), involved the processes of back office and interactions with customers (through i chatbots). RPA-based projects have also affected the investment services and in particular the consultancy and management of financial portfolios.