Advisory firm’s report urges banks to invest more in cloud, big data and cyber security.

The banking sector is in dire need of an IT overhaul to safeguard its future growth and protect it against cyber threats.

That’s according to advisory firm KPMG’s latest report into the sector, which highlights the growth challenges banks face as they fight to get back on track following the 2009 credit crisis.

The report states that, while banks have made a gallant effort to rebound since the recession hit, many are still struggling to achieve top-line growth. However, new technology investments could help them achieve this.

Furthermore, the growing threat of cyber attacks and the “dispiritingly disjointed” IT systems some firms in this sector employ means investments in this area are long overdue.

“When a digital economy is driving lightning-quick change and consumers have become accustomed to new, faster, and more mobile ways of doing business, [the question] is how fast the industry can change,” the report states.

It claims banks’ IT strategies have traditionally been driven by what business units need to operate and regulatory constraints, but they need to start considering customer demands too.

“Banks must continue responding to these needs. But as they shift their focus to revenue generation, they must also embrace IT strategies driven by customer needs, relying heavily on social media and other vast sources of data to find out what those needs are,” the report reads.

“Banks may want to take their cue from retailers, who have a history of mining customer data profitably.”

To this end, KPMG sets out several areas where technology investments could pay off. These include ramping up the use of cloud, business analytics and big data management tools within the banking sector.

“Banks that embrace change and systematically transform themselves to meet new customer demands will achieve a competitive advantage in the marketplace. Those that continue to ponder – or worse yet, resist – change will suffer,” the report added.

The report’s findings are timely, given the recent spate of downtime and outages the UK banking sector has suffered of late, which has prompted concerns about the amount firms are investing in IT.

Earlier this week, Lloyds Banking Group admitted a software bug had resulted in an HP sever failure that stopped millions of its customers making debit card payments and withdrawing cash from ATMs.