It’s dreadful being a buyer of banking technology
Financial institution executives need to up their game on tech purchases and technology performance management.
Any financial institution that’s standing at the end of this decade will have successfully leaned into tech to change their business, but this transformation is hamstrung today by the industry structure that has evolved with banking vendors. In nearly every encounter with clients, I hear stories of missed deadlines, releases with dingbat issues, integrations that mysteriously stop working, and fewer gritty professionals to assist in implementation and support efforts.
For credit unions hoping to avoid living in a “same as it ever was” state with technology, there are five mandates that executives must follow:
Mandate #1: Set realistic expectations about being a tech buyer
Executives are waking up to the fact that dreams of effortless partnerships with vendors are silly. Vendors that provide mature solutions at scale are only part of the equation. New vendors with more unproven solutions require another set of challenges and a different management playbook. Vendors can be part of transformation, but transformation cannot simply be purchased.
Mandate #2: Prioritize proven integrations and ease of configuration in vendor decisions
As financial institutions focus on speed to market, they must become more discerning about how different solutions impact the pace of delivery. Conducting due diligence on integrations requires a rigorous “trust but verify” process, and spending time working in test systems prior to signing the check to a vendor can help stress-test how easy the solution will be to evolve with the institution’s resources.
Mandate #3: Build a next-gen information technology (IT) team focused on member experience, data, integration, and risk
Every organization needs to build a tightly integrated “seal team” that can extend, integrate, lightly customize, and monitor a growing stack of new platform solutions (primarily cloud-based). For the chief financial officer, this means a punctuated investment in raw talent to make the institution more self-sufficient from a tech perspective.
Mandate #4: Visibly connect vendor spend to business outcomes
Cornerstone Advisors continues to sound the drum that financial institution executives have way too little visibility into the spend and target outcomes of their technology investments. In 2021, the Standish Group reported that 83% of IT projects failed to meet a deadline, cost estimate, or target business outcome. Just like a loan production, delinquency, or budget report, management reporting and accountability giving visibility to tech must become more commonplace in the C-suites.
Mandate #5: Work the tech road map every quarter
Executives need to create and oversee a formal tech road map that visualizes key initiatives, go-live dates, vendor contracts, and important business outcomes to deliver. By continually working with a road map, leaders will soon realize there is no quick way to transform—it takes grit and tenacity along each workstream and deadline in the road map to be a truly different institution in the future.
Credit unions are all in the fight of their lifetime with the need to transform their businesses. While it might be easier to think about building a new institution from the ground up, most do not have that luxury. Instead, they need to transform the existing organization primarily by buying and better managing technology solutions. As tech buyers, executives need to invest more in these purchases than they are today, and they must build a better rigor around the discipline of technology performance management.
Today, financial institutions are technology companies. Whether you’re under competitive pressure to meet changing member expectations, dealing with evolving compliance requirements, feeling the pinch of the talent shortage, or wanting to save money and improve efficiencies, you need clear insight into the state of your technology and your vendors. Cornerstone Advisors can help you transform your institution by better managing your technology solutions. Contact us to get started.
STEVE WILLIAMS is a founder and president at Cornerstone Advisors, where he has assisted hundreds of credit unions in their efforts to become highly efficient, top-performing financial institutions.