Ah, fall. The leaves are turning; young men, egged on by our cheers and our bets, mutilate each other on the football field; and banks turn to their favorite question – what technology investments will we make in 2003?
Well, it doesn’t look to be a “leap of faith” year. While spending on technology is expected to increase 5% (according to TowerGroup), much of that spending is slated for infrastructure, security, and other areas that don’t necessarily rise to the top of the strategic importance pile but are going to be required nonetheless. Remaining investments will be debated hotly, and not all requested projects will be funded.
Perhaps the best perspective I’ve heard on discretionary technology spending came from a CEO whose opinion I greatly respect: “I’ve done the acquisitions I think I need to do. I’ve hired the people I think I need to hire. I’ve bought most of the technology I think I need to buy. 2003 is a year where I just need to take it all and execute my plan.”
So what’s the buzz? Based on a lot of talking to both banks and vendors, this is our take on what is likely to get funding and not get funding next year.
As you have come to expect of Cornerstone, we have developed a complex, multi-tiered, iterative, closed-loop project analysis and ranking methodology that is the basis of today’s tome. Here’s what we asked ourselves:
Based on this sophisticated methodology, here’s our take on “hot” and “not hot.”
The technology has become affordable, which either means fewer costs internally or lower outsourced IP bills. Research at the bank is faster, easier and less costly. Postage costs get reduced somewhat. And, with all due respect to some consumer action groups that oppose the proposed Check Truncation Act, customers like it better. A win-win-win.
The challenge to your bank is this – why would any customer still be getting paper checks returned by the end of 2003?
Technology, via DU and LP, has drastically improved mortgage lending efficiency. Ditto for credit scoring and consumer lending. Then there’s commercial lending – the last bastion of duplicate input, disparate tracking systems, paper trails, and manual process. The solution will involve technology, process challenge, policies and procedures, and even a definition of what is commercial and what’s small business/consumer. But there’s big money to be saved…
OK, debit cards are mainstream. But the income is being challenged by the merchant move to PIN-based instead of card-based. Visa is trying to electronify checks you should already have gotten customers to stop writing, anyway.
But whatever happens, there is no downside to getting customers to use those cards. And the best part is that the technology and cards are already there. Now it’s a marketing and sales issue. For you Gonzo readers in Marketing – how about taking the lead on a plan to get an audacious increase in card usage? How about double, at minimum, between Jan. 1 and Dec. 31, 2003?
Many banks have found great commercial banking niches. The right cash management system is a vital piece of serving this niche. And, frankly, many banks are offering systems that were purchased years ago and are running out of functional life. This is one investment to get right, and initial cost isn’t the major factor.
The biggest bettor on wireless, Bank of Montreal, announced earlier that it is pulling funding due to lack of customer usage. We’re floored. Now all that damn cell phone is good for is calling people.
Customers already have it. It’s called Quicken. A better solution hasn’t appeared for 2003.
Um, let’s see. It’s Saturday night… I’m steppin’ out… feelin’ good… gal by my side… swinging by the ATM for some cash… people behind me in line… yeah, that’s right. Time to surf the Web!
Seriously, this whole idea feels like it has about as much life in it as the mackerel in my freezer.
This is a tough one. The idea makes perfect sense. Eliminate paper, streamline process, save storage, share information faster, improve efficiency, save money. The problem is that the payoff has to come mostly from people, and nobody seems to be signing up for it. Vendors will need to have specific success stories before the check gets written.
See above. Nobody argues with the idea of enterprise information storage and management. But, specifically, where has money been saved or made? It’s nice to think that increased sales and fee income justify the investment, but such an argument will need to be very specific and backed up by credible numbers.
Direct billers are proving that the simple, focused efforts will work. Businesses that see float improvement or reduced costs will get on board. The technology issues may not be fully settled, but there’s nothing like customer demand to accelerate a process. Banks need to be the place businesses go for answers and solutions. There may not be an investment to make in 2003, but somebody should be doing deep research. Something is going to happen.
This is what I’ve heard banks being told: It’s not a system, it’s a series of systems… it’s an integrated approach to sales and customer service… it’s about customer profitability… it’s about managing data… it’s knowing everything about your customer… it’s about integrated delivery… it’s an umbrella… it’s a philosophy… (it’s a dessert topping… it’s a floor wax…) You know what? There’s another word for all this. It’s called banking.
My sense is that bankers are getting tired of this global conversation because they can’t translate it into specific investments or projects, so they’re moving on to other business.
So call me a cynic…
Still around, still being used. Upgrade purchase in the 2003 budget. Who’da thought?
There’s a sort of back-to-basics theme to all of this. Technology that works. Measurable payoff. Customer needs and behavior that justifies the focus.
It makes sense to me.
Editor’s Note: Terence’s “What’s Hot and What’s Not in Tech Funding” should not be confused with Scott Hodgins’ “What’s Hot and What’s Not in Banking” (from “Listen Up” – 6/12/01) because, as we all know, Mr. Hodgins occasionally has to be fetched back from where the buses don’t run and his interpretation of the events around him can be, at times, um, otherworldly. Still, it’s worth checking out if you haven’t…