Bank of America announced last week it is cutting 7,500 employees. Unfortunately, it's not because of improved technology-it's because of Countrywide. The best employee-reducer in banking is acquisitions. I'm sorry to report the bad news, but today's technologies are going to make bankers at the top work harder and overworked bankers at the bottom will be welcoming additional coworkers. Before you take that double-shot of Jose Cuervo, hear me out.It's simply a question of physics, folks. For every action, there's an equal and opposite reaction. Add a new technology and more labor is needed to react to the tech resource. Give a banker more IT tools, and they'll work their butts off using them.
I used my report (just published) as the basis for this blog. See if you can shoot holes in my claim.
Exhibit 85 shows there are 132 pieces in a typical bank's technology pie. Nine are highlighted as taking center stage in 2007 and 2008 as the hot apps, and will continue for a few more years.
1. Compliance, Security and Fraud Prevention After the techies complete the implementation and set the go-live date, do you expect it will be business as usual? I don't. The compliance officer will be overwhelmed with new reports producing thousands of entries on suspect lists. Who's going to work those reports? Call center employees will get blasted by irate customers who have been blocked because the techies set the controls at "intense." Who's going to answer the calls? IT people will be on the phones listening to users who want explanations that the techies haven't been trained to answer. Who's going to provide answers? Servers will crash because they weren't expecting volume spikes like these. Who's going to re-architect the configurations? Fraud detection systems will probably catch one bad guy and irritate thousands of good guys. Who's going to handle that upheaval?
2. Electronic Bill Presentment and Payments Is this one of those technologies that the customer runs? What happens when he needs help? Who's he gonna call? A help screen? How many bank employees will it take to support the EBPP system?
3. Business Intelligence/Risk Management This is like #1. So you now discovered the bank is in trouble. Do you sit back and say, "Hmmmmm. Who's gonna fix the problem?" The BI system might give some clues, but Artificial Intelligence isn't as good as the real kind. People have to analyze clues to separate warnings from actual failures and then act. Who will do that? It's sort of like your home alarm system that goes off at 3:00 AM. It's four cops in five minutes surrounding your home that will finally ease the tension, not the noise.
4. Electronic check clearing-Check 21 A nice piece of legislation-eliminate the paper from the item processing equation. But bankers knew they'd have to build the infrastructure (aka people) to handle the system. And will check processing vendors introduce new reduced rates because of reduced paper handling?
5. Credit Quality Surveillance Like #1 and #3. How many people does a bank need to follow up on deadbeats and future suspects? Is the system going to do that with automatic call generators? Does a bank farm it out to Bangalore? Knowing there are bad credits in the loan portfolio doesn't make them go away. People do.
6. Wealth Management The system can now segment the big players, and maybe it can match them with products. Now who's going to go out and get the business? Bangalore is not an option.
7. Cash Management and Treasury Services This is a pleasant surprise because new versions of cash management put the system in the hands of corporate treasurers, and that's a good thing. Unless of course, something goes wrong. Your call center support group will now be talking to all manner of self-service customers. "The ATM ain't giving receipts" and "All my accounts are out of balance because of an apparent day-delay posting in your system" require more people and different kinds of people.
8. Remote Deposit/Merchant Capture/Teller Truncation What the bank used to turn over to item processing vendors in big batches now is spread out to millions of customers and branch employees. Making customers work is a good thing for banks. Adding more work for tellers isn't.
9. Mobile Banking Giving customers more channels to suit their habits is a plus. But on-the-fly habits demand real-time support. Will the mobile customer wait for "the next available service representative" as she hails a cab to downtown?
In case anyone has forgotten, for every technology, there's a bunch of people needed to make it work.