I thought about this and decided I had to disagree – at least to a point. This type of yin and yang relationship exists all over the banking world right now but tends to be less “public” then co-CEOs might be. For every commercial lender out there trying to close his/her next big strip mall deal, there is (or should be) someone in credit administration just waiting to say, “Hold on a second, I think we better look at this one more closely since the borrower appears to be asset free at this time.” For every retail EVP demanding the implementation of mobile banking, remote consumer check capture, online account opening, and mobile bill pay next week, there is someone in product development saying, “Hold on a second, we should probably prioritize these initiatives, build a business case, and possibly scrap all of them since we’re a commercial bank and our cash management system consists of providing customers an abacus and our fax number.” For every bank exec saying they need to get email on their new iPad, there is a neo-maxi-zoom-dweebie in risk management saying, “Hold on a second, we might have some customer privacy and security issues with Apple’s TCP/IP protocols and our network firewall.” And lastly, for every mortgage our originators are trying to close in this frigid environment, we thankfully have the federal government saying, “Hold on a second, we need to create a set of complex regulations whereby the common sense of the government is substituted for that of the borrower who thought he could afford a $700,000 home on a salary of $52,500.”
Which brings me to my point, albeit in a roundabout way. When one looks at management of the I.T. function in the typical bank, this yin and yang is either non-existent or badly broken. There’s simply no Natasha and Boris for my Bullwinkle; no Darth Vader for my Yoda; and certainly no Snooki for my Bruno Mars. While most bank functions have strong executive bosses or “counterparties,” I believe banks unwittingly organize I.T. to bear the brunt of institutional frustration precisely because there is neither an effective counterparty nor boss. Retail, marketing, treasury and ops all want their projects done and I.T. is there to please. Hell, even the CIO’s boss wants his projects done. There simply isn’t anyone to “just say no.”
Why is this important you ask? Because there are big simoleons at stake, my friend, and that should get everyone’s attention. According to Cornerstone Advisors’ recent 2010-2011 benchmarking metrics from mid-size banks across the country, which will be published soon in The Cornerstone Report: Benchmarks and Best Practices for Mid-Size Banks, the average bank in the $10 billion to $40 billion range spends somewhere between 26 and 33 basis points of assets on technology (the numbers are fairly similar for the $1 billion to $10 billion crowd but shoot up to 29 to 43 basis points for banks under $1 billion). Even a non-finance, non-I.T. guy like myself can figure out that that adds up to $26 million to $33 million every year for a $10 billion bank. Over the life of a five-year strategic plan, that bank is going spend an average of $150 million on I.T. So how do banks generally organize to manage their annual spend of $30 million, or $15 million, or even $5 million?The first thing banks do is identify the CIO – a Golden Retriever – and all he wants to do is please his constituents. Sure, the bank may have some minor hurdles in place like a business case write-up that could get a solar powered ATM project approved, or a toothless I.T. steering committee that has a “yes/no” reputation like a husband being asked by his wife if she looks good in this dress.
But by and large the Golden is left to his own devices. In turn, the Golden needs support to keep everyone happy (which is impossible of course) so he hires frenetic Jack Russells to work the help desk; pontificating Sheepdogs to write code and do integration work; introspective Poodles to manage infrastructure; nervous Nelly Chihuahuas for the “program office,” and the list goes on.
Nowhere in this scenario has the bank said, “You know, our Golden could probably use some company from a Bulldog or Pit Bull or Rottweiler.” There simply isn’t anyone at the kennel to keep things in check – no Forrest Gump who had to apologize, “Sorry for ruining your Black Panther party.” You wouldn’t give a lender $30 million, wish her luck, and advise her to “Please lend responsibly.” No, you have checks and balances in place. So why do banks give their CIO $30 million of the bank’s assets, cross their fingers, and say, “Please manage this responsibly.”
So here’s an idea for all our loyal Gonzo readers that I think is a good one – hire the Bulldog! Whether you call that person the co-CIO, the Chief Technology Financial Officer, the Chief Technology Accounting Officer, Mrs. No, or whatever – I don’t really care what you call them – it’s what they do and how they do it that’s important.
What does your Bulldog look like?
Where does your Bulldog report and does anyone report to her?
What does your Bulldog do?
All for now.
Because we know that technology spending consumes a major part of your non-interest expense budget, Cornerstone Advisors’ Strategic Technology Planning services fill a critical need for prioritizing and guiding your organization’s technology investments.