Core Banking

Investing in Lending Technology: IT Spending in Banking

August 25, 2022

Investing in Lending Technology
This paper studies the economics behind the investment in information technologies (IT) by U.S. commercial banks in the past decade. By linking banks’, IT spending to their lending technologies, we analyze the distinctive natures of banks’ dealings with information across various lending activities. Investment in communication IT is shown to be associated more with improving banks’ ability of soft information production and transmission, while investment in software IT helps enhance banks’ hard information processing capacity. We exploit polices that affect geographic regions differentially to show causally that banks respond to an increased demand for small business credit (mortgage refinance) by increasing their spending on communication (software) IT spending. We also find that the entry of fintech induces commercial banks to increase their investment in IT—more so in the software IT category.

Spotlight

Cofunds

Established in 2001, Cofunds is the leading general investment platform for advisers and other financial institutions, with assets under administration of £73.1bn*. Cofunds continues to lead the market in AUA terms according to official Q3 2014 statistics provided by Fundscape and The Platforum, with market share at 21%.

OTHER WHITEPAPERS
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The New Era of Financial Operations Management

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whitePaper | March 28, 2023

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Connected Banking for a Connected World — and Why Low-Code is the Key to Realizing This Vision

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Spotlight

Cofunds

Established in 2001, Cofunds is the leading general investment platform for advisers and other financial institutions, with assets under administration of £73.1bn*. Cofunds continues to lead the market in AUA terms according to official Q3 2014 statistics provided by Fundscape and The Platforum, with market share at 21%.

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