Academic journal article ABA Banking Journal

The Headache: Keeping Technology Costs Down

Academic journal article ABA Banking Journal

The Headache: Keeping Technology Costs Down

Article excerpt

Tech costs drive noninterest expense up, but nowadays, community banks have to have it to compete. Indeed, tech has sometimes functioned as the equalizer between large and small banks. We recently asked a group of bankers meeting for next month's technology roundtable what steps their institutions had recently taken to control technology costs.

REMEDY 1

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Robert Braswell, president and CEO, Carolina Bank, $650 million-assets, Greensboro, N.C.

Approximately five years ago, we went in-house with our information technology. At the time that we made the switch, we were paying $85,000-$95,000 for outside consulting services. The very first year, we saved $50,000, by taking IT inside.

REMEDY 2

[ILLUSTRATION OMITTED]

Gregory Patton, president and CEO, Sierra Vista Bank, $80 million-assets, Folsom, Calif.

We're a two-year-old de novo bank. As you might expect, the first year we were in operation, we hired consultants to help with IT. The second year we hired a chief information officer away from a much larger institution. Already, her workload has expanded much beyond what she originally had to do. She has brought a lot of value to her job. And on a monthly basis, she is less expensive than the consultants.

REMEDY 3

[ILLUSTRATION OMITTED]

Ken Burgess, Jr., president and CEO, First National Bank of Midland, $330 million-assets, Midland, Texas.

We are in the middle of converting all of our bank's network servers to virtual servers, to try to reduce the number of servers we have. It enables you to be more efficient with your backshop. [In this sense, the term "virtual server" refers to a single server that runs with independent sections, called "partitions," that behave as if they resided on separate servers. …

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