Getting the Most From Your Technology Investments
By Proctor, Ken
Getting the Most From Your Technology Investments
By KEN PROCTOR
Director Risk Management
Brintech
New Smyrna Beach, FL
Community banks overwhelmingly agree that the effective use of technology is vital to their continued success. Most also agree that they are not realizing all the benefits they expected from their technology investments.
Following are six prescriptions to help banks maximize technology ROI.
Prescription 1 – Align strategic business and technology objectives
Maximizing benefits from technology investments starts with a strong technology plan, one that aligns with the bank’s strategic business objectives. The technology objectives should help the bank achieve the strategic objectives, focusing on the specific technologies needed to accomplish those objectives. Stated differently, the strategic business objectives should drive the technology objectives.
To ensure the successful achievement of any given strategic objective, management must consider the impact on seven key “change levers:” people, process, organization, technology, products, customers and markets. Technology is only a tool, an enabler of a solution, not a solution unto itself. Technology can enable – but not create – a solution in any of the seven change levers.
Prescription 2 – Carefully select vendors and systems
Ultimately, the bank’s ability to maximize the effectiveness of technology will depend largely on choosing the right technology vendors and systems. Research has shown that many community banks make expensive, long-term technology decisions based on little more than a series of sales presentations. If they choose correctly, the whole bank benefits. If they choose incorrectly, it could negatively impact operations throughout the bank, degrade service quality, slow growth affect earnings. Consequently, it is vital to follow a disciplined process in selecting a vendor and system.
Prescription 3 – Invest in technology that expands and leverages customer relationships
Today banks have access to systems and information about their customers and prospects that could not be imagined just a few years ago: where they live, how much they make, education level, age, family size, which financial services they use.. .the list is seemingly endless. Many banks have “improve cross-sales” as a key strategic objective. Properly used, technology can enable solutions to achieve this strategic objective.
Prescription 4 – Invest in technology that augment the retail delivery channels
A recent Federal Reserve Bank survey indicates the single most important factor influencing a customer’s choice of banks is the location of its branches. Small business owners indicate that local branch offices, staffed with local decision makers, is their preferred banking channel. The branch office has also become a key to relationship and cross-selling efforts. To maximize its effectiveness, however, many banks still need to invest in technology that supports branch operations and sales activities. For example, investments could be made in technology that:
* Centralizes inbound customer service calls, enhancing retail office productivity
* Links platform systems to the core to reduce account opening effort and time
* Links platform sales systems to the customer relationship management system to determine the products customers are most likely to buy
* Supports access to transaction images and other customer information to aid in effective, timely resolution of customer inquiries
Prescription 5 – Align people, process, and technology
Technology solutions are sometimes applied in a vacuum. By that I mean that solutions are sometimes implemented before the banks review all the supporting manual processes and organizational structure. As a result, as we used to say in Georgia, the bank ends up “paving the pig paths.” Efficiencies that might have been gained with technology are lost because the processes that the technology supports are themselves inefficient. High performing banks continually review and fine tune processes and organizational structure, roles and responsibilities to ensure that personnel make effective use of technology, have the technology they need to speed up processing cycle times, enhance analysis and management reporting and improve decision-making.
Prescription 6 – Invest in training and support
In the most recent ABA Community Bank Competitiveness Survey, 18% of Bank CEOs surveyed said they expect to increase spending on technology training. While that is a good start, technology training efforts in many banks are woefully lacking. Many employees do not know how to effectively use the technology they have, learning “on- the-job” instead of through formal instruction. High performing banks have:
* Enhanced formal training in technology, spending as much as 15- 18% of their IT budget on training
* Identified business users as “owners” of key technology systems and provided extensive training to those users so that they can provide internal application support
* Provided help desk support to users, with one support person for 50 to 75 users.
At the end of the day, technology is still a tool. It is not the silver bullet we thought it might become. Maximizing technology investments still requires banks to run efficiently and effectively and incorporate technologies to support the business. Technology on its own won’t get us there – strategic implementation and selection of technology will.
Ken Proctor is Brlntech’s director of risk management. He created the risk management practice area for a national financial services consulting company and served as a senior consultant with two international risk management-consulting firms. He is an instructor at the Louisiana State University Graduate School of Banking program.
Copyright Public Relation Enterprises, Inc. Apr 2007
(c) 2007 Michigan Banker. Provided by ProQuest Information and Learning. All rights Reserved.