It May Be Three Years Before Bank IT Returns To Its Typical High Performance

I see a glimmer of hope in the banking industry; just enough to expect that routine matters such as keeping the IT factory up to date with new apps, ongoing reliability, strong security, responsive customer service, real-time speed, risk management tools that protect bank assets, databases to provide focused new business opportunities, connections for EVERY customer relationship, and the all-important intel function that inquisitive minds will require more of - my humble definition of a well-run bank IT shop - is very achievable if a bank has the power to spend capital.The problem with IT in the past couple of years is that it has been working under a cloud of serious errors, committed at the executive suite and board room, that is. The impact on IT was equivalent to what happens when you stop feeding an 800-pound gorilla. I don't believe there was one CIO among the current 15,743 U.S. financial institutions who had the audacity to make the following statement at any management meeting during the past two years: "I am here to request an expenditure of $xxxx million over the next five years to upgrade to a new and currently available technology platform."

As we enter "dec02-cent21" it seems like an overdue time to take the IT platform from the 60s, 70s, 80s and 90s to a newly enabled world of internet, mobile, electronic, "my place not yours," "wherever I'm at," "my time not yours," and "any which way I want it" style of banking. I know this sounds like old stuff, but praise the CIOs for managing crews that used lots of Gorilla Glue to paste things to an obsolete architecture. And don't think customers didn't notice. "How come I get three different balances when I ask from three different devices?" It's all about infrastructure. If you don't get it, think about the poor soul who's taking a shower and then Mom starts watering the garden, Sally flushes the downstairs toilet and Hilda turns on the washer. You can't blame the users of each device; that's today's life style. Just like bank customers. You can't force them to change their habits. You have to deliver. Most of today's financial institutions need new infrastructures.

Here is my idea of three parts that could solve the problem: supply, demand and economics.

Supply - Even if you are a dreamer, I can point you to a tech solution that will deliver whatever you want. Just looking at core solutions alone, there are 29 companies that provide 75 brands of core systems to a global banking world. Twenty companies are based in the U.S. and nine are offshore, but with ambitions to take over the U.S.

Demand - Ask any good CIO what he wants from his tech resources and he will respond with two things: 1) maximum functionality and 2) architecture that evolved after he was born. The oldest bank core system is 46 years old. The newest is less than a year old.

Economics - One answer has been prevalent whether you're at BofA or First De Novo of Euphoria. We ain't got the money. That's why I say it will be another three years before IT rights itself.