“If you think technology can solve your problems, you don’t understand technology and you don’t understand your problems.”
—Daniel Okrent
Gonzo readers, let’s call it what it is: Banks and credit unions have spent years piling on platforms, point solutions, data feeds and AI experiments in the name of innovation. Now the bill is coming due—not just in dollars, but in complexity. The CIO’s 2027 mandate won’t be to buy more tech. It will be to make the tech stack make sense.
The Gartner tea leaves are pretty clear:
- IT budgets are barely budging. Gartner projects 2027 IT budgets will grow by just 3.7% on average—which, after inflation, won’t feel like much of a raise. Meanwhile, demand keeps climbing for cybersecurity, data analytics and better digital delivery. The exception: agentic AI, where funding is expected to jump 31.8%, making it the fastest-growing technology investment area.
Sidebar worth noting: More than half of CIOs say they’re under pressure to produce AI-driven savings. A third don’t believe they can deliver them, and only 13% say they’re seeing those savings now. More on why that matters in a minute.
- Technology buying is drifting away from centralized IT. Gartner says 16% of technology solutions are already purchased or developed outside IT, and nearly all IT executives expect that number to rise—potentially to 25% within three years. The governance gap is the kicker: 73% of enterprises have no formal rules or standards for business-line ownership of technology costs and solutions.
Put those together and the mandate gets ugly fast: CIOs are expected to squeeze bigger returns from flatter budgets while more technology decisions move outside their control. That is how systems complexity becomes the problem hiding inside every other problem.
- The sheer number of systems and vendors – A conservative estimate of the number of major systems/vendors the typical FI has is 12-20, and the total number of vendor contracts of all sizes can easily be near 100. Cornerstone data shows that this number grows every year.
- Integration complexity – A picture of all the rules and data interfaces between these systems would provide the same clarity as a large pot of spaghetti.
- Data complexity – The number of data sources, data destinations, data marts and reports grows at the same pace as systems.
- Security complexity – Every CIO in the industry is on the hook to ensure that all systems and data are safe from the myriad threats posed by increasingly sophisticated hackers/fraudsters, whether they were involved in the buying decision or not.
- User experience complexity – Users don’t care about how messy or complicated the back end is. They just want a simple experience when they sign on and start working. One of the biggest challenges facing any IT group is translating back-end complexity into front-end usability.
If Cornerstone has learned anything in 25 years of working with clients on technology management, it is this: complexity is expensive. The more complex your system environment is, the more you will spend to support it. Furthermore, complexity is the outright enemy of the aforementioned savings and productivity that management and boards are expecting from technology and, in particular, AI investments being made.
Even with decentralization, the CIO is the person with the best horizontal view of systems and systems complexity, even if they are not involved in all buying or development decisions. And, while there is no such thing as a “simple” bank systems environment, the CIO is in the best position to strategically reduce complexity as much as possible. There are several steps that can be taken:
- Own the standards that matter. The more a financial institution can follow standards for tools, data, AI development, security and infrastructure, the more complexity and cost can be managed. When designed and managed correctly, standards empower a team, not restrict.
- Related to that, manage vendor sprawl. There are certainly valid reasons to use single-purpose best-of-breed solutions. There are also times when the list in functionality isn’t big enough to warrant another vendor or system. And, every institution can find a solution it is still paying for that nobody is using anymore. The CIO is in a unique position to lead this conversation when a system purchase or renewal occurs.
- Make sure that “shadow IT” initiatives follow consistent governance policies when system purchasing or development occurs outside IT. Those policies are crucial for many things, but security is the most visible downside of non-compliance.
- Work with the CFO to create a comprehensive view of all technology spending, including AI. While a financial institution can’t manage complexity simply by managing the budget, a view of all tech-related spending is a very good way to start a management conversation about both complexity and ROI.
- Be the advocate for the end user and always argue for simpler access and navigation. The end-user experience, how easy or hard it is to get things done, is the payoff to analyze.
Alan Perlis once said: “Fools ignore complexity. Pragmatists suffer it. Some can avoid it. Geniuses remove it.” One of the greatest strategic values IT leaders can provide to a financial institution is a technology ecosystem that allows users to achieve maximum productivity. The ironic thing is that the better a CIO is at simplifying a technology environment, the less the rest of the team thinks or talks about it. But that’s the destination, no?
