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Here’s How to Become More Than the Branch Next Door
In a country with thousands of options, the challenge for a bank to stand out is mighty and existential at its core....
Back in the day, when I was the CIO of a bank, we had a Technology Plan. It was a single document that had every aspect of the bank’s technology goals for the year – hardware, software, vendors, projects (all led by information technology, or IT, by the way) – the entire bank IT budget. It was designed as a “vertical” document that discussed and incorporated line of business needs and goals and discussed them in chapters. This was because technology planning was considered a “vertical” effort, and the CIO was a bit of a Czar who had very strong budget authority.
That was then, and I won’t say how long ago that was – too depressing, although it was fun being a Czar for a while. This is now, and one of the most fundamental changes to technology planning we have seen is that it is now a “horizontal” (or “latticed”) effort and outcome. Investments in core systems and infrastructure have declined as a percentage of total spending. Investments in delivery, payments, and information systems increased significantly and buying decisions and accountability for them moved to the lines of business. The result? Rather than lines of business being chapters in a technology plan, technology is a piece of the strategic plan that can encompass multiple business groups. Consider:
These are just some examples. There is a consistent theme in all these areas. Key strategic initiatives involve multiple business groups, and each one has technology as a component. In effect, much of a bank’s technology plan is embedded in its other strategic plan and initiatives. As a result, a single, stand-alone technology plan or document may be a thing of the past.
So what? Here are five things we see that can make this world of technology planning more successful:
This may sound obvious, but it is surprising how many times we see IT brought into these conversations very late in the game.
As technology planning decentralizes, standards are crucial. Nobody but the CIO knows what non-negotiable standards need to be set.
This is a standard, but it needs to be called out because one of the most important and frustrating issues in bank technology today is bad clumsy system interfaces/integration. This is a top focus for any CIO.
There are hundreds of data sources and destinations in any financial institution, and no end to the opportunities to have redundant or inconsistent data. The alternative to having the CIO manage this is to set up weekly meetings in the hallway where people can discuss why numbers on reports are different.
Cornerstone numbers show that technology still represents 10% to 15% of all non-interest expenses, third only to people and facilities (at some point in the not-too-distant future, it will be second only to people). Management needs a very clear picture of total technology spend and payoff, and the CIO is best positioned to do this.
In other words, give the CIO and IT key responsibility and authority in vital components of every horizontal strategic initiative.
When done well, we have seen that horizontal (or latticed) technology plans are powerful and can move the bank forward quickly. When done poorly, they are expensive, frustrating, and can slow strategic progress. We’ll opt for the former.
Sep 22, 2023by Chris Fleischer, Tristan Green
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