2007: In Your Dreams

I don't know what it is about "2007." It's not a nice round number like "Y2K," which was the most talked about year since the birth of commercial computing in the 1950s. Still, 2007 will be the first year of in-your-dreams technology. It'll be sweet for most financial institutions because the new-applications list has been whittled down to a no-pressure situation of reassessing value decisions and fine-tuning the "system." Vendors, however, will be challenged to make technology a lower-cost and more-adaptive resource.

General Forecasts

• New owners of bank technology companies will make most of the headlines.
• Banks will make better use of what they have.
• Banking applications won't change much, but new resources (Internet, wireless, capture hardware, superpower processors, store-it-all devices and business intelligence tools) will continue to make old apps better. IT-savvy employees will help, too.
• Massive system replacements will not occur again as they did in the 1980s and 1990s because most banks already have made the move -- and they chose well.
• The availability of good technology is stronger than ever, as are many solutions providers. But the decline in demand will influence more vendor consolidation.
• Tech vendors will have a tough time finding new things to sell. Servicing existing customers won't create enough revenue. Cross-selling has been going on for decades, so existing customers have already bought everything. And potential buyers will be fewer because of a decline in the number of financial institutions.
• Fresh opportunities for U.S. bank tech vendors will appear in "Chindia," but all-American sales reps will find lots of resistance in their approach to dazzle new cultures.
• Large banks will still be the big spenders because "big technology" is never finished, and it gets more complex every year. It doesn't help that every large bank is using a core system that was born in 1960 or thereabouts.
• Watch for new balances of power between the CIO and CFO. In what is becoming a less-mystical business, CFOs will be challenging the cost of technology. For example: If IT powerhouses such as IBM Global Services, EDS, Accenture and Perot Systems are setting up shops in Chindia, why are we still paying U.S. rates for IT labor?,

Stragglers Are Catching Up

• 675 financial institutions (mostly credit unions) will convert to a new core system in 2007.
• Check 21 will continue at a casual rate of implementation in spite of obvious benefits.
• Electronic bill presentment/payments will move slowly as banks reorient internal systems to fit the external environment of multiple standards du jour.
• Compliance and security measures will make piecemeal advances, unless the regulatory agencies exercise their clout and levy more deadlines.
• SOA will give new life to proprietary architectures without the need for a conversion to open architecture.
• Remote branch (customer) capture will be adopted by all financial institutions, but at their own pace.
• Recent discretionary applications (CRM, BI, treasury services, marketing intelligence and Internet awareness) will be implemented by the most forward-thinking banks, which could be a de novo all the way up to Citibank, Bank of America and Chase, and any financial institution in between.