EY: FIVE questions every bank exec should consider when investing in tech

Continuing my pickup of great reports this week, here’s one from EY who used to be known as Ernst & Young. This report is about the five questions bank execs should be asking about their tech investments, namely:

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

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

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

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

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

It’s a good report, and here’s a quick summary:

The EY report on technology spend in banking argues that banks are spending more on technology than ever before – more than $4 billion annually for the largest institutions – but much of that money is failing to create real long-term transformation.

The core problem is that banks remain trapped in short-term thinking. Most technology budgets are consumed simply “running the bank”: maintaining legacy systems, meeting regulatory requirements and patching old infrastructure or, what we would call, technical debt. There is no innovation or investment in new things. It’s just money to keep the lights on.

EY estimates that only around 12% of technology spend is directed toward true strategic transformation.

This is why the report frames the issue around five critical questions.

First, banks must ask whether their governance structures reward long-term innovation or simply prioritise quick financial wins. Most institutions still expect technology investments to pay back within 18 to 36 months, which discourages ambitious multi-year transformation programmes.

Second, banks need to free up more budget for strategic investment rather than constantly funding maintenance and compliance. Legacy systems are swallowing resources whilst slowing innovation.

Third, EY highlights the enormous drag created by old infrastructure. More than 80% of banks surveyed said legacy technology prevents them reducing operating costs, whilst 86% linked outdated systems directly to project failures. Many institutions are effectively trying to build AI-era services on top of decades-old architecture.

Fourth, the report warns that talent shortages are becoming critical, particularly in cybersecurity, generative AI and engineering. Banks know AI will reshape the industry, but many lack the internal skills to execute transformation properly.

Finally, EY argues that banks are poor at explaining technology value to boards and investors. Institutions may file thousands of patents and spend billions on innovation, but markets often struggle to see the business impact because banks communicate activity rather than outcomes.

The overall message is blunt: banks are pouring billions into technology, but much of the spending is defensive, fragmented and focused on survival rather than reinvention.

Unless banks align technology investment with long-term strategic outcomes, AI, cloud and digital transformation risk becoming enormously expensive incremental upgrades rather than true competitive advantage.