The banking industry is beginning to resemble a house undergoing endless renovation — the harried homeowner can't get around to finishing any one particular project because so many others clamor for his attention. Meanwhile, the funds from that home equity loan are beginning to run out.
Incomplete projects facing the typical large institution now include customer relationship management systems; online banking and bill pay; wireless; and now, B2B e-commerce. A business case can be made for each type of venture. Cumulatively, however, all of this work in progress strains resources at precisely the moment when banks face renewed revenue challenges from a slowing economy and accelerating credit problems.
Unquestionably, institutions must do a better job of prioritizing and matching resources to strategy. Executives can lose sight of strategy in the act of trying to curtail expenses, however, and that creates its own problems. The march to e-commerce can be slowed but not halted. At no point can strategists shrink from the organizational and cultural transformations needed to succeed in the new environment.
Put another way, institutions must think beyond technology to address all of the factors that ultimately contribute to a project's success. This point is driven home by our cover story on customer relationship management. As writer John R. Engen explains, institutions have tended to focus on the technology aspect of CRM while soft-pedaling equally vital organizational and cultural issues. The result: expensive projects with questionable returns.
A similar problem can be seen with electronic billing and payment. As discussed in our interview with CheckFree Corp. CEO Pete Kight, the technological progress in this market has not been matched by a commensurate marketing effort. The result: customer adoption rates lag far behind expectations.
If these distortions have occurred in good times, how much more severe might they get in a period of duress? That's something for senior managers to think about as they map out priorities in an increasingly constrained budgetary environment. If anything, institutions need to step up their efforts to address all of the internal and external issues that govern the success of technology-based projects, even as pure technology spending is pared back.
We may have finally reached that point in the business cycle where companies no longer can afford to try to do everything. By keeping a balanced perspective, however, senior managers can still advance the projects that matter the most.
Mr. Johnson is publisher of BAI Banking Strategies and president and CEO of BAI.
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