Information Technology and Banking

Posted by Matthew Speed on Dec 17, 2015

I have wanted to write something on Information Technology’s relationship with banking for a while, but the topic is a bit overwhelming and I was not sure how to start. Information Technology, or IT, is such a broad topic that entire books can and have been written on just small areas that are encompassed in this subject. The point of this post is to touch on how important, and often undervalued, the IT resources of financial institutions are.

I work quite closely on a weekly basis with many different bank and credit union IT groups, and it always surprises me at how different this department is from institution to institution. While the groups are very different, there are also a few similarities that I see which I want to discuss. One thing I see very often is that the people in the IT department are not very familiar with banking. Also, IT groups are frequently understaffed and pulled in many different directions. I regularly see instances where there is a concentration in expertise in one individual. The most troubling and most common thing I see, are IT groups that are seen as merely support and not utilized as the strategic resource they can be.
IT group
Having people in the IT group that are also bankers is not necessary, or maybe even advisable if you are as “computer challenged” as I am. People that work in IT are interesting individuals that are intelligent, and often laser focused on their chosen profession. Because of this focus, they can be resistant to learning about things they may consider unnecessary. That said, it can have a huge impact on department effectiveness if there is some basic understanding of banking products and services in the IT group. Something as simple as having a common vocabulary is critical to different groups being able to communicate. This understanding can dramatically increase communication effectiveness between the IT group and other bank departments, frequently improving the financial institution’s overall satisfaction with IT.

If there is one complaint I hear more than any other, it is how there are so many projects that are pulling IT staff in multiple directions. These competing projects not only cause stress to the staff required to meet multiple deadlines, but can affect the quality of the work being done on the projects. While it is not possible to eliminate this type of difficulty, the key to minimizing how it affects staff (not just IT) is having strong project managers that communicate with each other. The project managers should have clearly defined priorities, allowing those working on the projects to focus on the most important requirements first. signwithmanydirections

Knowledge concentration is a risk not just confined to IT groups. Most departments have that one person who knows everything about a certain topic. While having this type of resource is great for that department, it can create unneeded stress on the individual that everyone is leaning on to answer all the questions. In an IT group there is the much greater risk that if this person leaves, it actually opens the organization to additional risk. These specialists can be incredibly difficult and expensive to replace. Knowledge is meant to be shared and passed on, proper training it critical to minimizing the risk of knowledge concentration.

Financial Institutions hold huge amounts of information about their customers. If they can convert that information into knowledge, they can use it to offer customers goods and services that better meet their needs. Francisco Gonzalez, the CEO of BBVA said last year that:

The financial services industry has becomewhat I call the BIT (banking, information, and technology) industry — but this is merely a transitional phase on the journey to Knowledge Banking, which will provide far greater value, furnishing more and better solutions and effectively supporting global economic development.

By moving to a “Knowledge Banking” model, financial institutions will be able to improve the customer experience, extend additional product offerings, and stimulate innovation. The key to being able to harness this information and turn it into knowledge lies in the resources invested in the IT group.

I could write pages on each of the points above and not discuss all the important factors involved. In addition, I know there are many other issues driving how financial institutions treat their IT resources. Risk, cost, and other factors all play an important role in how IT is developed. However, as the world progresses to becoming more interconnected and online, IT is only going to become more important. Therefore, it is critical that IT groups are treated as a resource to be leveraged and not just another expense.

Matthew Speed

Manager
Hometown: Pensacola, Florida
Alma Mater: University of West Florida
Former Eagle Scout and supporter of the Boy Scouts of America. Avid Hiker, Mountain Biker, and Sports Fan. Die-hard Atlanta Braves fan.

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