A line in the 2013 edition of Core, the Computer History Museum’s magazine has stuck with me ever since a colleague passed it along in an email. It goes:
“A JP Morgan Chase executive in 2012 described her company as an information technology business that happened to hold a banking license.”
The magazine’s editor used the anecdote to help illustrate the growing sense technology, namely software and information systems has come to dominate the world’s economy. From what I’ve witnessed in the last four or five years that I’ve spent around the banking industry, I can’t help but agree. It’s taking place through the obvious advances on the consumer side — things like online, mobile or payments — and through the many technologies empowering financial institutions to provide those services and, more importantly, to better understand the customer.
But what does it mean being an information technology business first? That idea implies more than simply advances in the types of services provided through retail delivery. For some institutions that might require a shift in attitude. Banking in that sense isn’t simply about managing money and providing loans. It’s about managing data and networks, too. That’s why when we read about banking today, we hear so much about the core, about big data, cloud services, network security. The set of tools working in the background that allow financial institutions to compete as information technology companies are of the technological variety.
Of course it’s easy for the biggest financial institutions to tout their technology and leadership in the game of information services. Their sheer scale allows the largest banks and credit unions the sort of staffing necessary to both run the IT side and to continue incorporating innovative features into the institution. However, I’d make the argument that a smaller bank, with the help of good vendors and the clear strategic vision of its senior management and trustees, can be just as effective at adapting to the changing times. Network monitoring and management free up a small staff to do more with less. In recent years, virtualization and cloud services have become more affordable and more tailored to a financial institution’s specific needs. The process of identifying outdated systems and replacing them with faster, more powerful and more versatile solutions has become easier than ever.
The prudent incorporation of the right information technology backbone can ultimately help a smaller financial institution meet, and even exceed, the expectations. As for the future of banking, well, it is increasingly influenced by technology with the passing of each year. Here’s one vision of how that might look a few years down the road: