As uncertainty continues to reign into 2021, bank executives across North America are turning to technology to drive efficiencies and bring costs down. In fact, nearly half of these respondents to Deloitte’s Center for Financial Services Global Outlook Survey 2020 said they planned to implement technology to enhance efficiency in the next six to 12 months, more than any other measure asked about. While most of the other initiatives involved some level of cost-cutting, such as rationalizing headcount or trimming discretionary spending, this one actually comes at a cost — put another way, execs are betting that an investment upfront will lead to savings down the road.

The Covid-19 pandemic created a unique environment where banks simultaneously had to cut costs while also beefing up their digital capabilities as their customers stayed home. That’s led to a flood of investment in new technology; 65% of banks surveyed by Bank Director last year reported increasing their tech budgets as a result of the pandemic. But investing in technology without strategic decision-making behind it could backfire, leading to little in the way of returns. It’s easy to become attracted to shiny-looking value propositions, especially when you’re in need of help. The trick is to make sure that your technology investments are aligned with the goals of the organization.

On the cost-cutting side, that could mean greater investment in data analytics to help streamline operations and better allocate resources. Or, it could be implementing chatbot or virtual assistant technology to supplement customer service staff. Still another option might be implementing remote workforce optimization technology to better measure productivity. All of these measures offer potential gains but realizing those gains will depend on how and why they are implemented. For example, a chatbot is unlikely to do any good without a plan for time saved. How will those workers be reallocated? Will there be redundancies? What KPIs are we measuring against?

Technology no doubt is the way forward, both when it comes to improving experiences and driving efficiency wins. And the embracing of digital by many institutions, especially in the past year, is a positive development. To get the most out of these investments, though, the strategic piece needs to come first. Implementations should be mapped to a clear business need with measurable outcomes, as well as a rollout plan to encourage adoption and ensure the technology is being used effectively.