Technology Risk – Example Banking IT
As per a recent study, on an average bank spends 10% of its revenue on IT Costs. IT and IT cost structure play a decisive role in the performance of any bank. This article examines the challenges around ensuring the effectiveness and efficiency of IT Spend. How to ensure that spending on IT translates into increased operational efficiency. Banks face greater risk if there is a misalignment between business and IT strategies. Technology risk holds strategic, financial, operational, regulatory, and reputational implications
Digital disruption continues to change the banking landscape and puts pressure on the traditional banking model to increase its spend on IT. Historically, banks have offset some IT cost increases with improved operational efficiency, gains in competitive advantage, enhanced customer experience, and some productivity gains. IT demands are still escalating while pressures to keep costs down are intensifying. Typically, most banks and financial institutions today are trying to improve cost-effectiveness by optimizing the banking channels and reducing operating and IT expenses.
With the banking industry facing low margins and hefty compliance investments, banks need to remain vigilant and keep costs well under control. While there are several potential strategies to manage costs, banks need to determine which is the most effective for them. In this article, we will explore, how to create a project to look for ways to either control costs or increase value is driven out of IT through productivity gains?
IT risk functions need to revolve around seeking answers to some pertinent issues relevant to the enterprise. Information technology function needs to play a pivotal role in business transformation and growth in the Bank. On the other hand, it must also take into account the increasing expectations around digital banking experience from millennials and Gen Z’ers.
Technology is a great enabler, but it also presents a pervasive, potentially high-impact risk. IT risk-related challenges in financial services will grow in number and importance in the years ahead. Banks face greater risk if there is a misalignment between business and IT strategies. Technology risk holds strategic, financial, operational, regulatory, and reputational implications
What is the current business challenge?
The average bank spends ~$200MM & employ over 1000 IT professionals. How do we harness this to drive banking services advantages for the 21st century?
Key considerations
Focus on a product or service delivery feature with customer value that may be implemented across multiple businesses relatively simply (modest investment) and quickly (6-12 months or less). The scope would ideally be on a banking priority, such as funding, loans, cards or SME offerings & new distribution.
What is the goal of this project?
Identify significant technology-enabled improvement(s) that Bank can implement to enhance its banking capabilities with customer and market impact. Examples might include mobile banking, e-servicing, contactless payments, etc.
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