How Banks Can Boost Technology Speed and Productivity

Banks today have a unique opportunity to elevate the productivity of their software engineering teams. By doing so, banks can boost technology speed and productivity without needing larger IT budgets.

Technology has transformed the banking sector. Traditional banks have expanded their tech teams, who now play a crucial role in creating innovative products. These products include AI-powered personalized experiences for customers, streamlined digital payment options, and analytics-driven cross-selling opportunities. Bank tech teams are also integrating acquisitions, automating back-office tasks, and handling vast data securely. Reviewing a bank’s strategy often reveals that most key initiatives are heavily reliant on technology.

However, many banks struggle to invest fully in tech innovation. Budgets are tight, and as technology ages and becomes more complex, the costs to maintain it increase. Many banks have already tried traditional methods like outsourcing or renegotiating vendor contracts to cut costs. Now, they are in search of new ways to create budget flexibility.

Some forward-thinking banks are taking a different approach by concentrating on increasing their tech team’s productivity instead of merely cutting costs. Inspired by the practices of digital-native software companies, they focus on maximizing the time their tech staff spends writing code, then helping these engineers work as effectively as possible. This developer-focused approach is common in the tech industry, but it is still relatively new for most banks. Banks that have adopted this strategy, however, are already seeing positive results. The most productive banks achieve around 50% more technology capacity—measured by the hours teams can dedicate to innovation—than their peers without raising their budgets. They’re also able to release new features for customers faster and attract skilled engineers who bring valuable practices to the organization, forming a cycle that further boosts productivity.

This article explores how this productivity-first approach works, identifies key strategies that yield the best results, and offers actions for leadership teams to get started.

Maximizing Technology Investments

In many banks, spending on technology—whether for talent, hardware, software, or services—is often the biggest expense. Yet, technology spending is sometimes seen as a “black box.” While banks can track how much they invest and whether projects are completed on time, they often have limited insight into the productivity of their tech teams or whether improvements in efficiency could be beneficial.

In recent years, some leading banks have begun using scorecards to evaluate their engineering teams’ speed and productivity. They analyze data from the tools their teams use, allowing them to spot areas where both speed and quality can improve and where they can better support creativity within their teams. By enabling their engineering teams to work smarter, these banks have significantly increased their technology capacity compared to average banks—all without increasing budgets.

Let’s compare an average bank with a top-performing one. At a typical bank, only half of the technology staff is engaged in creating software, and those employees spend about half their time on essential tasks like writing, testing, and maintaining code. This means only about 25% of the bank’s technology resources are focused on actual software development. The remaining 75% of the work involves tasks like coordination and analysis that, while important, could be streamlined or automated. In contrast, leading banks have about 70% of their technology workforce involved in coding or maintaining code, with these employees dedicating 55% of their time to core activities. As a result, top banks allocate 39% of their technology resources to software development—roughly 50% more than an average bank.

The productivity of high-performing engineering teams also translates into faster delivery of new features, fewer bugs, and higher-quality products. They create solutions that better meet business and customer needs, leading to improved user experiences, stronger customer retention, and revenue growth.

Four Strategies to Transform Engineering Productivity

Focusing on engineering productivity rather than just costs can shift how management views technology spending. Leaders begin to ask what actions will meaningfully improve productivity, assess the ROI of different approaches, and explore how to create a cycle where a better environment attracts top engineers.

To increase productivity, bank leaders can adopt four key strategies:

1. Optimize the Software Development Life Cycle

Executives are sometimes surprised by the manual work involved when tech teams create software. At one major bank, for instance, a developer needed approvals from multiple teams just to set up an environment before writing code. After coding, extensive manual testing was required because automated tests covered only a few cases. Instead of streamlining this process, the bank had hired more managers and testers, adding to both costs and complexity.

A leading financial institution avoided this trap by conducting a detailed assessment, or “X-ray,” of its engineering teams. They updated their engineering tools, automated security controls, and created a coaching team to guide engineers. This bank achieved 30% more capacity without expanding the budget.

2. Use Generative AI Across the Product Lifecycle

Generative AI (gen AI) tools allow faster coding, but many banks treat these as standalone tools and overlook the need for broader organizational change. Some banks take a more holistic approach, extending AI tools to product owners to generate feature stories and architecture diagrams quickly. They see productivity gains of 20-30% in development teams by integrating AI into daily workflows and fine-tuning tools with their own codebase.

3. Integrate Tech and Business Teams

To improve tech productivity, banks often need to change how engineering and business teams work together. Creating integrated teams of product managers and engineers—operating like “mini-businesses”—reduces formal documentation needs and approval delays. One large bank achieved a 20-30% capacity increase by moving from an annual IT funding process to quarterly business reviews and cross-department coaching.

4. Build Skilled, High-Performance Teams

Leading banks are shifting from large teams of contractors to smaller in-house teams of highly skilled engineers. Experts command higher salaries, but their efficiency helps attract other high-caliber talent. One bank successfully transitioned from 70% external contractors to 70% internal engineers within three years by streamlining career paths and revamping their recruitment environment.

Making Productivity a Priority

Banks that succeed in this transformation typically have strong support from the CEO and executive team. Five key prerequisites ensure productivity-focused efforts take root:

1. Bold Goals: Set ambitious, attainable goals based on cross-industry success.
2. Measurable Impact: Establish a baseline to guide high-ROI actions.
3. Cross-Department Support: Make productivity a priority across both tech and business units.
4. Clear Leadership Accountability: Designate a leader to steer the transformation effort.
5. Early Wins: Build confidence with early successes in important business areas.

With these steps in place, banks can implement productivity changes at scale and achieve more for their customers and their bottom line.