Magazine article American Banker

Electronic Commerce: Bankers Told to Mind Steak, Not the Sizzle

Magazine article American Banker

Electronic Commerce: Bankers Told to Mind Steak, Not the Sizzle

Article excerpt

Banks are ignoring fundamental technology issues while chasing after fancy solutions to noncore problems, a consultant warns in his annual report on the industry.

They can move ahead of the pack by focusing their resources on three areas: improving their core applications, implementing full-scale platform systems, and developing enterprisewide imaging systems, Art Gillis writes in "Automation in Banking."

Mr. Gillis, the founder and owner of Computer Based Solutions Inc., of Dallas, does not mince words in his criticism of banks' yearning for the Next Big Thing. They "are looking for the sizzle," he said in an interview.

"In the real world, 80% to 85% of what any bank does is based on core applications," he added.

In the report, published this month, he defines core applications as internal financial management systems, deposit systems, loan systems, and other customer-related applications. "You'll spend a lot of money doing those things, but you'll have excellent strengths and capabilities, and they are all designed to serve the bank's customers," he writes. In 2000, a record 8.12% of banks converted to a new core processing system. That is partly explained by the fact that some held off until after their Y2K concerns were allayed.

Mr. Gillis recommends that bankers talk with their back-office personnel to find out where improvements are needed. "Employees suffer the degradation of doing things themselves that the system has left undone, things that should be automated," he said.

Ultimately, core system tune-ups help customers, and that, Mr. Gillis said, is the point. "The best thing a phone center can say is, 'We're not getting any calls.' It's the weaknesses in the core applications that produce those calls."

In his view, 2000 was a predictable and unexciting year for bank technology, especially after Y2K turned out to be a "nonevent. …

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