Our industry – and the entire world – are awash with technology in all its forms. Making good decisions regarding technology acquisition and integration has become a core competency requirement for all companies in general, and for those who have a large number of customers and distribution outlets in particular. Banks are in the second category.
What questions should you ask yourself as you consider a new technology-based solution?
How compatible is the new solution with your technology configuration?
We often underestimate the difficulties of integrating technology solutions into our existing infrastructure. A decade or more of “open architecture” solutions has helped us address major integration issues. And yet, even state-of-the-art infrastructure requires major investment in technology integration. In addition, we tend to over-customize, which adds to the cost of implementation beyond simple integration.
Should you purchase “gold standard”, established technology or opt for the newcomers?
We continue to look for the “silver bullet” of technology solutions, and yet gravitate toward proven, industry standard solutions. The risk associated with creative, out-of-the-box solutions has proven so high that many of us shy away from taking it. We’ve seen banks lose their competitive edge as they got snarled in interminable development morass, project delays and cost overruns. And yet, creativity can pay off big-time, especially when core solutions have been reduced to a binary choice from two suboptimal providers. It’s especially frustrating to see new market entrants get gobbled up by those two and disappear… We are all still waiting for a reliable third alternative and a fully digitized, flexible solutions. Some banks have stubbed their toe in the water by finding very limited and focused uses to such solutions.
Finding new FinTech entrants to partner with is an exciting prospect that many of us are engaged in. Those are anything but the “gold standard”, and they offer refreshingly unorthodox solutions. One of the frustrations with these newcomers is, in return for being a beta site and generally preferential pricing, the likelihood of these companies being acquired and dismantled or distorted by the acquiror is high.
Does training for the technology ever end?
That’s something we already know: training never ends, especially because we rarely make the most of any purchased technology, including your core. On-going review and exploration of your technology will move you toward greater optimization of the technology investment. The price for that is never-ending training.
What are the maintenance costs of the new technology beyond the one-time purchase and integration price?
Maintenance costs are typically understated. System administrators are now standard for most technology acquisitions, as are developers and other staff to ensure basic functionality. Vendors’ project staff aren’t always effective, and many of us get second- and third-tier support as top-line assistance is dedicated to the larger banks. Be realistic as you fully price the project.
Do you have qualified people to handle the new technology?
Despite major technological leaps and the advent of GenAI, technology still can’t run itself. Finding qualified people to run your cutting-edge technology is a difficult task, and they command salaries well above their peers in your organization. Sourcing and integrating such talent is a critical success factor for any new technology deployment and must be considered as you assess the viability and profitability of installing new technology in your organization.
Can you afford to make the new investment? Can you afford not to make the new investment?
Recent years taught us that not all technology is “table stakes”, despite industry-wide testimonials to that effect. Separating the “must haves” from the “nice to haves” and aligning both with strategic initiatives are essential prerequisite to solution selection and go/no go decisions. Many technological solutions are helpful, even differentiating, yet not feasible to your bank due to legacy technology platforms, higher priority investments and staff limitations.
It’s important to note, however, that some applications are truly non-negotiable to enable client retention and attraction. It is critical to perform an honest evaluation of how essential a proposed solution truly is before you pull the trigger. Equally important is the fit of this new technology into your current and future customer base and their definition of service. It is possible that some solutions work exceptionally well in early-adopter markets but not in an aging community, for example.
Impact of the new solution on customer experience, staffing and profitability
Prior to making a final decision it is necessary to pool all your datapoints for a comprehensive and honest assessment. At minimum, answer these questions:
- Is this technology solution optional or essential to retain your existing customers and/or attract new ones?
- Does it fit and enhance your identity, go-to-market approach and value proposition?
- How would this solution impact customers, employees and market position?
- Realistically how expensive will the all-in cost be, the run rate cost and the overall impact on profitability if performing well based on most likely, most pessimistic and most optimistic projections?