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Reluctance to Invest Now Can Exacerbate Tech Troubles Later

American Banker
Coming out of this crisis, banks are going to want to be as flexible as possible, with a nimble technology infrastructure that lets them respond quickly to every opportunity made available to them in the marketplace.

Good luck with that.

The complex maze of hardware and software lurking behind the curtain at the nation’s biggest banks has grown even more treacherous since the start of the downturn and the advent of shotgun mergers between banking companies and their information technology systems.

Diagram: Left Behind? Few top bank technology executives were bullish when asked whether their firms IT budgets' were likely to change from the prior year. In 2008, 41% said their budgets would remain about the same, while 46% said that their budgets would increase and 13% reported their budget would decrease. In 2009, 44% said their budgets would remain about the same, while 27% said that their budgets would increase and 29% reported their budget would decrease. Prediciting for 2010, 52% said their budgets would remain about the same, while 28% said that their budgets would increase and 20% reported their budget would decrease.

IT teams, overloaded with work even before the widespread layoffs that thinned their ranks, are scrambling to rewire, amid an increase in regulatory scrutiny and demands for better internal auditing.

Banks are being pressed to do more at a time when their bosses would prefer that they spend less, without sacrificing any of the attention paid to online banking sites, automated teller machine networks, transaction processing and other workaday systems that keep banks in business.

As a result, many banks are holding off on projects to make their IT infrastructure leaner and more efficient.

But the longer banks postpone addressing the complexity issue, the harder it will be to contain it as an IT problem and the more likely it will become a full-fledged business risk, said Rudy Puryear, head of the global IT practice at the consulting firm Bain & Co.

For more information, contact Novantas Marketing

+1 (212) 901-2772


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