Community banks and credit unions remain committed to investing in new technologies and services as needs evolve. In fact, according to the 2018 Community Bank and Credit Union Information Technology Outlook survey, nearly 80 percent of community bank survey respondents claim their technology spending has increased in the past 18 months, and 88 percent of credit unions claim their technology spending has increased in the same time period.
Community financial institutions depend on their IT network infrastructure and technology solutions for nearly all functions including managing data, network monitoring, online banking services, ATM services, teller functions, email, regulatory and compliance issues and security monitoring. This means it is crucial that all solutions work together efficiently. For this to happen, financial institutions must continue to update their hardware and software and invest in new resources or services to enhance their financial institution and better serve their customers.
Here are six costs to consider before purchasing new technology solutions for your financial institution.
- Physical Hardware — Hardware costs can include the initial hardware price or lease costs of the actual IT equipment for computers, laptops, servers or other network hardware.
- Software — This includes purchasing software solutions, licensing and subscriptions. This can be costly depending on how many users are involved. The costs can also vary depending on if it’s a one-time purchase or a cloud-based system with a set annual fee.
- Operational — This cost considers the impact to the users. For example, solutions that improve efficiency, enable integration, automation, improve decision making, and better collaboration allow bank staff to reduce manual tasks and focus on more revenue-generating activities.
- Education and Training — Implementing new technology solutions usually requires some training and education for the end-user. If you are replacing or updating a solution that works in the same way as your current system, little training may be required. However, more complex systems or upgrades can require significant training which can be costly.
- Support — Support and maintenance are often underestimated when evaluating new banking products and services. As technology changes and evolves, there are often upgrades to the software or hardware that financial institutions must be aware of. Ongoing costs related to security upgrades, software updates, computer repair and general support are a necessity to owning and utilizing technology.
- Warranty — Purchasing an extended warranty or service contract that covers damage is often recommended and needs to be included in the total cost of ownership. The extended warranty will often cover repair or replacement of a device or solution due to mishaps for a longer time than the manufacturers’ warranties.
No technology lasts forever. New systems, hardware and techniques are constantly being developed to automate processes, increase efficiency and improve the overall organization so understanding the costs associated with implementing new solutions is imperative. Careful planning, evaluation and preparation will result in successful technological implementations.