By John Ginovsky

Accenture recently came out with its technology predictions for 2012, and underlying them is a consistent theme: the need, more than ever, for technology investment to increase revenue, and quickly.

ABA Banking Journal Tech Topics talked with two Accenture directors about what this means specifically for bank CIOs, and what’s likely to be top of their lists this year. The executives are Nigel Smith managing director/banking distribution and marketing services in North America, and Jim Bailey, managing director/payment services in North America.

Tech Topics: How is the role of the bank CIO likely to change?

Nigel Smith: The clue is in the name—chief information officer. It’s the ability of the CIO to partner across the executive team, with the chief marketing officer, with whoever owns distribution, and to find them more pragmatic tactical solutions.

Tech Topics: So CIOs have to have a place at the business table as well as at the technical table.

Smith: Absolutely. The pressure is going to be, “We’ve got all of this data. We’ve got the analytics team. What can we do with it? How can that help us close that near-term profitability gap?”

Tech Topics: So that relates to channels. Mobile payments seem to be a surging thing. Where is that heading, in this context?

Jim Bailey: There will be quite a bit of activity this year in mobile commerce, mobile payments, mobile banking. To the earlier point of ensuring the alliance of technology and business, it really is all about making sure the technology is deployed correctly, and that the business leaders are informed. With the proliferation of mobile and e-commerce channels, the art of the possible is best known and best articulated to the enterprise from the CIO’s organization. Their spot at the table is certainly very important.

Specifically around mobile banking and mobile payments, 2012 is going to be a very important year, when a lot of the key players are trying to sort through the shape of the future and what the future business model will be. With the proliferation of smartphones and the adoption of these channels, we’re seeing some big moves from nontraditional players—the PayPals, the Googles. It is important for banks to be out in front. We are seeing a fair amount of activity where banks are coming together and working to define standards in those business models. It remains to be seen how quickly the market will move.

Tech Topics: What’s the first new technological area bank leaders should tackle this year?

Smith: The advantages of the digital space. You implement something there once and it’s available everywhere. Whereas, the equivalent investment in the branches, you build the solution once and then you have to deploy it [all over again at all] of your branches. Quite apart from the capital cost involved, that’s a very long pole in the tent.

Where we’re seeing competition for investment dollars is between the guys who own the digital channel and the guys who own the bricks and mortar channel. Partly because of the need to show near-term payback, partly because of the need to be relevant to catch up with the latest innovation of payments, I think the digital side of the house is going to see a disproportionate share of wallet.

Bailey: We are hearing quite a bit about cost reduction—that would be near the top of the list. Our banking clients consistently echo the theme of cost reduction and how to apply technology to that end. The implementation of cloud technology to reduce the infrastructure costs, the operating costs—that is a theme that has emerged in 2011 and appears to be continuing quite strongly in 2012.

Smith: [Back to the branch space.] It isn’t that they aren’t important. I think you’ll see banks experimenting with new formats, and they may struggle with the investment required to roll that out. You’ll see the high-profile stories, but that’s going to be more in the research and development stage this year.

 

About the Author John Ginovsky is contributing editor of ABA Banking Journal and editor of the publication’s TechTopics e-newsletter. For more than two decades he has written about the commercial banking industry. In particular, he’s specialized in the technological side of banking and how it relates to the actual business of banking. He previously was senior editor for Community Banker magazine (which merged with ABA Banking Journal) and was a staff writer for ABA’s Bankers News.

[This article was posted on February 14, 2012, on the website of ABA Banking Journal, www.ababj.com.]

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