How Digital Transformation is Possible Without the Big Budget Spends

How Digital Transformation is Possible Without the Big Budget Spends

JP Morgan Chase sent out a press release last year saying it invests $11 billion per year on technology. Spain’s Banco Santander SA announced a few weeks ago that it will funnel 20 billion euros ($22 billion) into digital transformation and information technology in the next four years. According to a recent Bloomberg report, several traditional banks are throwing billions at trying to be transformed into digital.

So, while digital transformation is the rallying cry in banking, interestingly it is only some of the larger banks – the top five mostly – that are seeing a lot of investment in the space. The smaller players in the field are most often dubiously wondering if they can manage to go digital if they can afford the investments, if they can handle the complexity and the expense. They think of the big banks that spend billions and feel that they will never be in a position to compete.

That is because they still view digital as something that costs millions and takes out a major chunk of their operational expense. They believe that technology is complex and very high-priced. In reality, though, digitization in banking is nothing like that. What these smaller banks don’t understand is that times have changed and how!

Digitization is no more about big money and large investments. In the United Kingdom, a new breed of banks has emerged known as “challenger banks”. These focus primarily on delivering digital-only services and exceptional customer interactions. Many of these have investments of $100 million or less. And their offers are pretty comprehensive, considering that budget also includes getting the banking license which costs around $30 million on average.

The market is also full of financial technology companies (fintech) that have cracked the code to a digital core that can offer reduced costs and streamlined processes. These companies have enabled a digital culture that is sustainable and incorporates the benefits of digital innovation into all parts of the business, creating a leaner, more connected ecosystem. Their focus is on providing a seamless, engaging customer experience. Most importantly, these firms have investments from incubators and angel investors, sometimes amounting to a little more than $20 million or even lesser.

Is this a very high budget for a small bank? Not really! What these firms are doing is that they are using the right services and partnering with companies that provide the right technical know-how to go digital.

The point is digital transformation these days need not be just about big spends because there are several companies in the market with the essential knowledge and expertise that can enable even banks with smaller budgets to achieve a lot. There is no need to look at the bigger players investing huge amounts of money in new projects. For all we know, a lot of that investment may have gone into maintaining the banks’ hierarchies and structures. Meanwhile, challenger banks and fintech are using strong digital distribution channels to offer competitive retail banking services. They are growing with the help of improved user experience and are expanding into new markets.

How Banks and Digital Partners can Engage with Each Other

How banks and digital partners can engage with each other

Smaller banks need to embrace a proper FinTech adoption strategy and partner with companies that help identify long-term potential via digitization. Here’s how they can do it:

  1. The first step is to be open and ready to go for digital solutions without worrying about big budget spends. The fundamental trend of today’s technology and lifestyle is simplicity and convenience. And that is exactly the idea behind banks going digital – to make banking fast and simple within smaller budgets.
  2. The next step is choosing the right technology partners considering digital infrastructure requirements, operating model and culture of the bank. Digital companies tend to have a strong understanding of technology to help banks leverage the benefits of technology-led innovation. The idea is to develop relationships with the right digital partners, working with emerging technologies, and designing new employee and customer experiences.


The technical expertise that digital partners lend can prove to be invaluable for smaller banks that don’t have millions to set aside for digital transformation. All they need to do is find proper collaborations and use every advantage possible to stay competitive in the largely digital future.

Learn how small banks and enterprises can benefit by hiring QuadLogix as their technology partner. We offer a FREE consultation where our in-house experts will help answer all concerns and queries as well as offer valuable insights.