IT: Strengthening Your Bank or Causing Strategic Weaknesses?

On 25 Jan, 2016 By BankOnIT

Increasingly, many banks are using technology as a key factor to increase their capabilities - to enhance employee efficiency, to expand financial services provided to customers and to establish a strong foundation for growth. But at other banks, technology is a strategic weakness: It hampers employees’ ability to serve customers, causes regulatory criticism of the bank and even exposes the bank to major financial risk and reputation risk if customers’ information is vulnerable to access by Internet hackers.

Is your bank one where technology is considered a strength that is helping you achieve your goals? Or, is technology at your bank a strategic weakness, limiting your capabilities and acting as a drag on efficiency? As a director, what key questions will help to show you whether your bank is using technology efficiently? Here are some questions that even directors without a technology background should ask and understand:

1. What is your bank’s ratio of computer workstations to total employees? Most banks have more
computer workstations than employees, but if it’s more than 120% ask why.

2. What is your bank’s ratio of computer servers to total employees? This one can vary depending on
several factors, but if you have 300 employees and 150 servers or 15 employees and 7 servers you should ask management why.

3. Do you pay an outside IT firm by the hour? When paying by the hour the vendor has no incentive to be efficient.

4. What does your bank’s computer room look like? Is your bank’s computer equipment arranged in an
orderly way? Is access to your computer room carefully limited?

5. Are employees complaining about how poorly their computer equipment is functioning?

6. How much time does it take for new computers, or new software applications, to be installed? Shorter is better - days or a couple of weeks; if a month or more, ask about it.

7. When there are computer-support issues, how long does it take to resolve them - and do they stay
resolved (or do the same problems happen again)? This should be measured in minutes and hours, not
days. And you prefer to limit the reoccurring issues.

8. What exceptions were listed in your bank’s last IT audit or IT exam? While fewer is certainly better with this question, some findings are critical.

9. When the board receives management’s reports concerning IT, is the information understandable? It should be as easy to read as a loan past-due report.

10. Are you getting enough details about how the bank’s major technology vendors do business? For
example, (a) are your key vendors outsourcing services to other vendors; (b) are they receiving SOC
(Service Organization Control) audit reports from an independent CPA firm; and (c) are your key vendorsexamined by Federal banking regulators?

Even someone who is “not an IT person” can ask basic questions that will help determine if technology is a strength in your bank or a weakness that is holding you back. Are you a bank director and have questions?