Why Banks Must Invest in Technology to Stay Competitive

European banks face growing challenges, from constantly changing regulations to competitive pressures that threaten their market position and ability to attract top talent.

Europe's Innovation Problem

A recent Realtid.se article shows a worrying trend: while global tech sectors boom, Europe falls behind the USA and China due to excessive red tape and limited funding. This creates a double threat - top talent leaves the EU while our clients lose their competitive edge in both business performance and talent attraction.

So, how can leaders drive real innovation when they're stuck in endless approval cycles and trying to understand increasingly complex regulations? The regulatory burden is becoming a major roadblock to growth.

The good news? Banks aren't navigating this alone. Working groups, industry associations, and technology vendors like nCino are here to help institutions invest in smart financial software that builds resilience and drives sustainable growth.

Adapting to Regulatory Complexity

Financial institutions face mounting pressure from complex regulations - Europe alone introduced over 14,000 new EU laws since 2019. This regulatory burden threatens both profitability and operational efficiency.

Advanced financial software transforms this challenge into opportunity. By streamlining processes and strengthening governance, banks can accelerate lending decisions while maintaining compliance standards, delivering faster, cost-effective services that meet ESG (environmental, social, and governance) requirements.

Learning from Experience

At nCino our extensive implementation experience reveals a critical insight: while data management forms the foundation of regulatory compliance- including ESG, many institutions create unwieldy teams of architects, IT specialists, analysts, and support staff just to manage data flows. This approach drives up costs while reducing control.

A smarter strategy embeds technology, including AI, directly into software solutions. Banks achieve faster results at lower costs. For example, loan origination frameworks like nCino LOS incorporate AI to automate data collection and compliance checks, eliminating the need for large, dedicated data teams. These platforms also integrate ESG lending frameworks directly into standard loan processing workflows.

The Cost of Overregulation

Banks now allocate up to 40% of IT budgets to compliance alone, diverting resources from innovation and growth. This doesn't just harm individual institutions - it weakens the entire financial system's competitive capacity globally.

Banks need technology that simplifies compliance management, allowing focus on core competencies while maintaining market competitiveness.

Building Sustainable Practices Drives Financial Performance

Integrating ESG principles into lending has shifted from optional to essential. Companies increasingly recognise that strong ESG commitments enhance both compliance efforts and profitability. Technology enables banks to embed ESG considerations into lending processes from inception, ensuring genuine impact beyond box-checking.

Our report "The Growing Importance of ESG" demonstrates that effective ESG programs improve long-term financial stability - crucial as regulations evolve and market expectations shift.

The Path Forward

Banks must invest in advanced financial software to streamline processes, reduce operational costs, and integrate ESG principles effectively. This builds organisational resilience against external pressures while driving sustainable growth and innovation.

Banking's future depends on intelligent technology integration that addresses both compliance requirements and overall financial system health. The time has come to harness technology's power not just to survive, but to thrive in our increasingly complex landscape.

What are your thoughts on regulatory compliance challenges in banking? How can we collaborate to transform lending markets and drive innovation? Drop your thoughts in the comments.

For personalised discussions about your specific challenges, please do not hesitate to reach out to me or my fantastic nCino family for any 1-2-1s, we are here to help!