Those institutions that had the foresight to begin core transformations and technology upgrades in the past year or so will start to reap the benefits of the increased functionality and efficiency enabled by those upgrades. North Shore Credit Union ($2.7 billion in assets) recently converted to New York-based Temenos' T24 core banking system, which runs on a Microsoft SQL platform. North Shore CIO Fred Cook says the Vancouver-based institution expects to realize gains from the investment in both its back-office and customer-facing operations. "We'll be looking to leverage its increased product and services functionality for front- and back-of-house departments," he says.
Although North Shore Credit Union isn't being hit with the same regulations that U.S. institutions face, resources remain tight, Cook suggests. The credit union's 2012 IT budget is "comparatively modest to the market" and will increase only slightly, by about 2 percent, he reports.
Roseburg, Ore.-based Umpqua Bank (nearly $12 billion in assets) will spend part of 2012 completing the technology projects it began over the past few years, including a complete infrastructure overhaul, a refresh of technology such as ATMs and the conversion of all locations to Cisco VOIP, says CIO Colin Eccles. "Over the past year or two we've been very focused on having all of our technology infrastructure in place," he explains. "We grew over many years by acquisition, and we're making sure all the components of our infrastructure are up to date. I'm confident that once that's all in place, the infrastructure to support the long-term future of the bank will be exactly where it needs to be, and technology will never be a barrier to future bank growth."
Similarly, Paul Johnson, CIO at Winston-Salem, N.C.-based BB&T ($168 billion in assets), says his bank will continue an IT centralization program as well as a core systems replacement and will look to invest in its mobile capabilities. "We're going to continue to be in a struggling economy, which means that from a business investment and customer perspective, it's going to be more of the same going into next year," he says.
Johnson confirms that expense management and consolidation will remain top of mind for many bank CIOs. "We're going to need to be able to maintain a really tight control over expense management, and a number of our initiatives will be more around driving some additional costs out more through automation activities and other cost-reduction activities," he says.
Umpqua's Eccles agrees, noting that over the next year, Umpqua will continue to invest in boosting operational efficiency, business process automation and workflow, while moving away from paper to e-documents. "We will try to drive efficiency so we can spend more time on the technology innovation side," he says.
Looking to the Cloud for Efficiency
As part of its effort to achieve efficiency goals, Eccles continues, Umpqua already has invested significantly in virtualization. "Everything that can be done with regard to cloud and virtualization we've already done," he relates. "As we built out our infrastructure to support disaster recovery, we created our own internal virtualized infrastructure, which in my mind is our own internal cloud."BB&T also is adopting virtualization, Johnson says. But the bank is in the early stages of building a cloud to support a utility-based IT delivery model in which the bank is a broker for services instead of having services and systems run and built at the bank. Moving in that direction will allow the bank to be more flexible in an uncertain economic climate, he explains. "What we're looking to create is an IT organization that is more flexible, with the ability to flex staff up and down and the ability to take advantage of what is increasingly going to be a more utility-based IT environment than what we see today," he says.
North Shore's Cook acknowledges that cloud computing has its advantages and will continue to build momentum, but he also voices concerns about the challenges associated with the technology. "You can't turn around without cloud computing being mentioned, so I have to believe it will trend up," he says. "But the challenge of cloud interoperability in supporting blended environments will still be an issue, and along with government and industry regulatory issues, it will come under greater scrutiny."
A Focus on the Customer Experience
With its major infrastructure projects wrapping up, though, Umpqua Bank will be able to focus more on customer-facing channels and technologies in the coming year, the bank's Eccles notes. "We will have a lot going on in that area," he says. "We want to do more around integrating channels so that customers don't get a different experience in each channel."According to BB&T's Johnson, increased customer expectations, especially surrounding the mobile channel, will drive the industry focus on customer-facing technologies. "There's a shift toward making things much more about the customer and the customer experience," he comments. "There's more of a focus on personalization and user experience than ever before."
With an increased focus on the customer experience and customer relationship management also will come a need to understand more about customers and the market, which will push business intelligence initiatives, notes North Shore's Cook. "Gaining deeper insight into our business drivers and client segmentation is critical for our competitive market and corporate profitability," he stresses.
Of course, channel integration, business intelligence and a great customer experience are built on sound data management, notes Umpqua's Eccles. "If you're going to start building out your channels to give an integrated experience then you have to do a lot more around putting data management in place so that the same data is available to all of your channels," he asserts, pointing out that Umpqua Bank will start in 2012 a data management project that includes building an enterprise data warehouse.
Data and information lifecycle management are on BB&T's radar for a couple of reasons, according to the bank's Johnson. "One would be the explosion of data that's going to come primarily through more of the mobile usage that we'll all have to accommodate in one way or another," he says. "And of course," he adds, "there is the associated security around that."
Avoiding the Regulatory Crush
Meanwhile, keeping up with regulations will continue to be a main challenge for banks in 2012, the BS&T Reader Advisory Board members all agree. "The regulatory climate is going to be at least as intensive as it is now, if not even more so going into next year," says Johnson, who concedes that this is a top driver of BB&T's focus on expense management.Umpqua's Eccles exhibits a no-nonsense approach to dealing with regulations. "It's just part of the work we need to do. There's more of it, and if there wasn't as much of that, we could do more on the project side. But it is what it is," he says.
"Every technology department and organization just needs to focus and prioritize," Eccles continues. "There's always greater demand than you're able to handle, and it's not because you don't have the expense to do more; but you can only manage and execute so much. Drive prioritization and focus on what is critical at the enterprise level -- and do it well."
RELATED SIDEBAR: The B.Y.O.D. Dilemma
An area that many organizations -- in the banking industry and beyond -- will need to spend more time thinking about is the accelerating bring-your-own-device trend, according to Umpqua Bank CIO Colin Eccles. "As more employees start to carry smartphones and are involved in social media outside of work, they'll say, 'Can't I get my work email and calendar and work contents on this same device?" Eccles notes.
As banks look into letting employees use their own devices for work-related activities, they first must consider the information security risks associated with connecting non-bank-owned devices to their networks, Eccles warns. "Organizations are going to spend more time thinking about how they can to some extent provide a bring-your-own-device capability but still keep the network and data secure," he says.