Investing in Lending Technology: IT Spending in Banking

August 25, 2022

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.

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OTHER WHITEPAPERS

iGTB whitepaper Banking as a Service

whitePaper | October 26, 2022

BaaS is reshaping how banks are looking at distributing their products and services. In the simplest fashion, it can be understood as the partnership model between banks and non-bank businesses and/or fintechs where the latter embeds the financial service into its core offering.

Australian CBDC Pilot for Digital Finance Innovation

whitePaper | September 26, 2022

The RBA is Australia’s central bank. Its duty is to contribute to the stability of the currency, full employment and the prosperity and welfare of the Australian people. It does this by conducting monetary policy to meet an agreed inflation target, works to maintain a stable financial system, acts as banker to the Australian Government, regulates the payments system and issues the nation’s currency. Over the past few years, the RBA has been exploring whether there is a role for a CBDC in Australia in the context of the RBA’s responsibilities for issuing the currency and overseeing the development of the payments system. The RBA is an industry partner of the DFCRC, and is using its involvement to support its research on CBDC.

Challenges and opportunities of the metaverse in the financial services

whitePaper | March 24, 2023

Experts agree that the metaverse, from both a technological and also a business perspective, still has a long way to go before reaching its full potential. Some sources, including Meta founder Mark Zuckerberg himself, estimate that it will take a minimum of ten years before his promise will be fulfilled. According to Gartner, only one in four people will spend an average of one hour per day in the metaverse by 2025 and only 30% of companies will have products or services ready for this new space.

How to use fraud management as a revenue generator and competitive differentiator

whitePaper | December 10, 2022

It’s a given that the largest financial institutions (FIs) will have positive pay products, but smaller community FIs that can offer the same—or better—fraud management solutions will stand apart from their peers and attract more businesses and other high-volume clients. Additionally, selling positive pay to business clients creates a relatively low-investment revenue stream.

test cloud whitepapaper

whitePaper | May 7, 2020

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