Who is our competition?

 In Articles and white papers

“We’re reinventing the wheel…” 

 

Are Banks actually technology companies in disguise, just waiting to break out into the brave new world? Ask yourself another, more searching question: would you rather back a technology company to become a better Bank, right now, than you would back a Bank to become a better technology company? I know where my money would be.

There are a number of technology companies that have set out to become Banks. The Banks, however, do not need to become technology companies; they need to stay as Banks but Banks employing technology in more informed and better ways. And the best technology is almost always to be found outside the Bank itself.

CTOs and CIOs should take note. We have observed an interesting change in behaviour either side of the Global Financial Crisis (GFC). In the early 2000s, European Banks were very much ‘we have in-house Tech arms and can do this ourselves; indeed we see it as the future’. Post-GFC, these are the very Banks who have, quite rightly, adapted their thinking to ‘let’s buy this in and make it work, at lower cost, and much faster than we could ever hope to achieve ourselves.’

By contrast – and there is a detectable pattern – the U.S. Banks were very receptive to new ideas and new technology prior to the crisis. But again, post-GFC, there has been a marked protection of I.T. budgets, almost as though new CTOs and CIOs – often appointed after the crisis at North American Banks – have felt the need to do this in-house, partly as some form of ‘differentiator’, but partly to ensure their troops also have something to do.

This is not good business. In fact the role of the CTO or CIO should not be to build Empires, rather to figure what is the best technology and how to leverage it to best effect, not to re-invent the wheel.[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container hundred_percent=”yes” overflow=”visible” margin_top=”” margin_bottom=”20px” background_color=”rgba(255,255,255,0)”][fusion_builder_row][fusion_builder_column type=”1_1″ layout=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none” last=”no” hover_type=”none” link=”” border_position=”all”][fusion_separator style_type=”single solid” sep_color=”” icon=”” width=”” class=”” id=”” /][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ layout=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none” last=”no” hover_type=”none” link=”” border_position=”all”][fusion_text]

“By extension, we are often asked who our competition is and the answer is easy: it is usually sitting across the table from us, at presentations.”

[/fusion_text][fusion_separator style_type=”single solid” top_margin=”” bottom_margin=”20″ sep_color=”” icon=”” width=”” class=”” id=”” /][fusion_text]It remains unclear to us just which is more painful – the time taken or the financial outlay – but we would guarantee that the hidden cost of these projects remains just that, hidden from shareholders.

These are the key reasons why this approach should change:

  • Poor shareholder value: fundamentally, the real cost of internal development is often masked, sometimes deliberately
  • Inefficient use of internal budgets: operationally, even ignoring the cost to shareholders, someone has to pick up the cost, somewhere
  • Time to market: if cost is not the key determining factor, the need for new functionality in a timely manner should be
  • Scope: the depth and breadth of what really needs to be delivered is never addressed, on time and within budget; this is a waste
  • Failure to benefit from improving industry standards: if the industry peer group is evolving a solution or a platform, further and faster, this would seem to be a logical route to go
  • Integration: a past history of internal projects – and legacy problems – is not indicative of a happy integration outcome, even for the new internal project; in fact, quite the opposite
  • Headcount: a full development team will cost more and achieve less, long-term, than a full integration team.

The suggestion, surely, is to buy in a platform and focus on integration, not development and its associated costs. If integration costs even 40 to 50% of a development project – and it won’t – then it still makes sense.

In summary, let’s talk to the shareholders. Lower overall cost, faster time-to-market, the availability of market-leading technology based on peer group input, and a better, more future-proof solution all sound like compelling reasons to me.

The non-Banking world has focussed on addressing unseemly large bonuses, rightly or wrongly; this is fundamental to things like shareholder value and returns on Capital. Bringing the same thinking to IT projects, seeking the most cost-effective solution possible, with all alternatives properly costed, strikes me as being the way forwards. The focus should be on functional fit, integration and project management, not re-inventing the wheel.

 

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