The largest problem with bank innovation is that we see or hear about a sexy piece of technology at a conference or at another bank and then acquire it. The new piece of technology ends up solving a known problem but in the process actually creates more problems, and risk, than it solves. It’s called the “Shiny Object Syndrome” (SOS), and it could be sowing the seeds of destruction for many banks. In this article, we look at the seven strategic questions you need to answer before acquiring any piece of technology.
While online account opening and digital lending are great, there is one function that is the most in demand by bank customers, yet most banks don’t think to provide any digital functionality around it. It is the one function that drives up the most cost for a bank and is the most significant reason why bank customers still say they want a branch. Solve this problem, and you start to become a true digital bank. In this article, we look at the data around the problem and how to solve for it.
One question we always ask is if we are spending enough on technology? After that question, we get confused and mired in the quicksand of financial reporting, finance philosophy and technology strategy. “Technology” is so pervasive that it is difficult to determine what the difference is between spending on “digital” projects versus “analog” projects. For instance, if we upgrade our phone system from dedicated copper to fiber optics that is an analog project but if we convert over to a slower voice-over-IP system is that a digital project? In order to shed some light, we did some research to help banks set their IT budget for next year.
Technology Spending As A Percent of Non-Interest Income