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Don't bank on it

July 21, 2005

David Berlind transcribes part of a Bank of America commercial, which (he claims) shows that "IT matters" as a strategic differentiator. Apparently, the ad features a BoA employee talking about how the bank processes billions of checks a year "flawlessly." The employee then says, "We engineer our own software." Berlind says that the ad "in no uncertain terms, attempts to point out that IT is one of the financial giant's key differentiators." I beg to differ. While the accuracy of the banking industry's check-processing systems is certainly amazing, is BoA's (or any bank's) check-processing prowess influencing how customers choose which bank to use? I very much doubt it. Customers assume that processing will be flawless; they don't take it into account in their decisions at all. And, in fact, I would guess that most banks do every bit as good a job as BoA in processing checks. It's an essential capability for a bank, but it's not strategic.

As to the fact that BoA engineers its own software, I'm not sure that's worth crowing about. I've heard from a couple of high-level IT executives at banks who claim that the custom-built software underlying many banks' back-office operations is at this point more of a headache then a differentiator. As one of them said, "We have tons of complicated, custom software supporting what have become commodity products." The custom software is an artifact of the past (when big banks had little choice but to roll their own code) that now just adds to maintenance costs. Banks have in recent years done a good job of creating shared standards and systems for a lot of back-office transactions, and I think that's the future for much bank IT: essential shared infrastructure that improves overall industry productivity but is inert as a differentiator.


As I posted to David's blog...

I wish IT *didn't* matter as much...

Holy heck, David, IT was supposed to help, not hinder. Now, it *daily* gets in the way. The number of ways that IT just doesn't work right on a daily basis is uncountable. It has become a burden in many ways. THIS is the scary part in having to deal with major corporations (banks, etc). They screw up and you'll *never* be able to do anything about it. Good luck calllng customer non-support, the lowest-level (and cheapest) workers they can hire.

"Your call is important to us." Yeah, right. Liars.

Posted by: ordaj at July 29, 2005 11:01 AM

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