ROME, May 31 Reuters Technology investments by larger Italian banks lag behind those of their European peers, the central bank said on Friday, urging lenders to step up spending to support innovation in their offer of financial services.

Italian banks have increased their investments in innovative technology fourfold since 2017, but they remain limited, Bank of Italy Governor Fabio Panetta said in the text of a speech at the presentation of the central bank39;s annual report.

They need to grow it would be a serious mistake to continue to fall behind in this area, Panetta said.

Banks with a stronger digital presence are better able to diversify revenues and gain market share in lending, he added.

Italy39;s biggest bank Intesa Sanpaolo is aiming to spend 5 billion euros 5.4 billion in technology in 20222025, as it switches to a cloudbased core banking IT system which it has successfully tested at a new digital bank.

Italy39;s No.2 bank UniCredit, which a decade ago outsourced its IT infrastructure, targets tech spending at 2.8 billion euros in 20222024.

Back in 2019, Spain39;s largest bank Banco Santander said it would invest some 20 billion euros in billion in digital and technology.

The Bank of Italy has stepped up its monitoring of IT outsourcing contracts, including through onsite inspections, Panetta said, adding there had been a sharp increase in serious cyber incidents reported by financial institutions last year.

The financial sector is an attractive…