Just Thinking

Open the business section of any newspaper today and you quickly come to the conclusion that if we are not actually in a recession, then we are sure in one hell of an economic slowdown. The latest alarming stat: according to outplacement service firm Challenger, Gray & Christmas, close to 134,000 jobs were eliminated in December 2000, the highest one-month figure since the firm began tracking the number eight years ago.Financial institutions have not been immune to this downturn.

Even formerly sacrosanct technology departments have felt the pinch. A recent example: First Union Corp., one of North America's largest banks, announced it was cutting 80 jobs in its technology division. Unfortunately, similar alterations to technology departments and strategies are likely as the worldwide economy continues to cool.

Although few would argue that a stagnant economy is good for business, is the resultant slowdown in the rate of technological expansion necessarily a bad thing for banks, their customers, and financial technology providers? Call me an optimist, but I think all three parties can prosper from a cool-down period.

In the dot-com-driven economy of the recent past, speed to market was the primary business motivator driving most financial technology decisions-a strategy with mixed results at best. Now that the economy is tight, this decision process has become much more judicious, and only technologies that fill a present need and provide immediate dividends will make it to market.

We are already seeing this dynamic play out in the banking space, at least when it comes to electronic bill presentment and payment (EBPP). Despite fears of an economic meltdown, banks are going forward with ambitious EBPP plans, the latest announcement coming from Deutsche Bank, which is teaming with Sun Microsystems to create db-eBill, a multi-language, multi-currency online platform that will streamline B2B EBPP.

Why is Deutsche Bank taking this risk? Because B2B e-commerce is a proven commodity, and EBPP will pay an immediate dividend to all involved-a drastic reduction in bill processing costs. It is an economic win/win/win situation for bankers, customers and providers, which has not always been the case in the past with new technology.

The good news is that there are several other cutting edge financial technologies that also present strong business cases for continued expansion and investment (see the cover story on smart cards beginning on page 26). Concerns that concentrate on these technologies will continue to do well in the financial space, no matter where the economy is headed.