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Why is banking IT so 'boring' now?
- IT TOPICS:Management
What is it with the banking industry? First, Computerworld columnist Thornton A. May has a column headlined "Banking's Boring Period." Then independent analyst Art Gillis has a blog post saying "This is a Pretty Dull Time for Banking Technology."
As May points out, "Once upon a time, not so very long ago, banks were among the most innovative of industries when it came to using IT to create competitive advantage." So is this period of non-innovation an anomaly or the new normal? May says pundits generally agree on the reason for the boring-ness: Massive industry consolidation (M&As, and the resulting integration hassles) has put innovation on the back burner.
Gillis says the problem is that there's no Big Thing requiring banks to go on an IT spending spree. In past decades, banks had to invest in ATMs, EFT networks, PCs, Y2K and Internet banking. Now? "Maintenance, tweaking, fine tuning, cost cutting. Nothing here for vendors," Gillis says.
Reading between the lines of both columns, I think you'll see another culprit: commoditization. Banking IT systems have become a commodity (like ERP); and banking industry products (for customers) have become a commodity. Where's the differentiation, or competitive advantage, going to come from? It's as though the industry is trying to prove Nicholas Carr right.
May says the competitive wake-up call may come from left field: Google Checkout.
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