The US government bailout of AIG is part of an historic 10 days on Wall Street that has seen American finance reshaped. The restructuring of US finance is impacting economies around the world for many reasons, including high levels of financial integration and an almost frictionless movement of capital on a global scale.
How does this impact banking and investment services CIOs around the world? CIOs have a dilemma. On the one hand, lower earnings and a shortage of balance sheet capital are putting pressure on IT budgets. At the same time, there are higher demands on IT, because of the credit crisis and liquidity crunch, as well as increased compliance and regulation, new competition (for example, financial social networks [FSNs]), and a challenging top-line growth environment.
Cost containment is important. But we can’t focus on cost cutting only. Growth is not optional for banks. The reality is that growing enterprises thrive and that flat to shrinking ones disappear. A single focus on cost cutting and efficiency will help enterprises through economic volatility. But in the long term, this approach will make them obsolete. Only the constant pursuit of business growth can ensure survival. CIOs need to focus on containing costs AND innovation – not just one or the other.
If you’re interested in learning more about our views in this area, take a look at “How Banking CIOs Can Contain Costs While Meeting Increased IT Demands.”
1 response so far ↓
1 Frank Schlier // Sep 18, 2008 at 9:24 am
From: Frank Schlier
Vice-President and Distinguished Analyst
Gartner Banking and Investment Services Industries Research
I agree strongly on balance between cost cutting and innovation. I would also add that balance is needed in IT decisions. We attempt to maximize IT value on each project and often sub-optimized bank-wide IT value by doing so. By selecting the best application, data architecture, data management system or technology platform for each individual project we have created a conglomeration of data and logic assets, systems software and technology architectures which all add to overall bank IT costs and the cost and time of transforming the bank to align with changing business conditions.
Banks need to focus on optimal banking architectures rather than project “marketectures” if they wish to maximize bank wide IT value. This is an issue in retail, wholesale and investment banking worldwide. Too much IT because we maximize each project IT decision.
Also, we focus on the productivity of our people but seldom look at the portfolio productivity of our IT investment. Portfolio productivity is a measure of how much labor, logic and data, technology and systems software is required to enable a given set of business tasks and processes. We need to focus on improving portfolio productivity through effective architectural decisions.
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