On December 1, I chaired Aite-Novarica’s fifth quarterly Financial Services CIO/CTO Advisory Research Council meeting. A select group of CIOs, CTOs, and heads of architecture at banks and financial institutions met to discuss IT budgets, projects, priorities, initiatives, and challenges for the upcoming year. During the conversation, IT executives shared insights, experiences, and solutions they’d found to address the key challenges their financial institutions are facing.
Finding the Sweet Spot Between Unified Experience and Open Banking
In Aite-Novarica’s Q4 budgets and projects Research Council survey, unified experiences across the bank emerged as a top priority for participating institutions, sparking a discussion about how it needs to go hand in hand with open banking. Council members felt that it was important to define unified experience flexibly, including building partnerships with fintech startups and executing initiatives such as omni-/multi-channel that bring immediate benefits to clients.
As part of the discussion, one participant brought up the idea of always up, never down. “Always up” is important in today’s banking IT world due to both customers and regulators. CIOs should address any issues with consistency prior to open banking capabilities or API integrations: If you have outages or instability, or if you’re not available digitally when people need you to be, they lose confidence.
Furthermore, there’s significant regulatory oversight to ensure that there are plans in place to address gaps: It is mandatory to adhere to regulatory compliance requirements around operational resiliency.
Addressing 2023’s Key Challenges: Talent, IT Ops, and Cost-Effectiveness
In our most recent survey, Council members indicated that IT operations and talent were particular pain points for their organizations. Council members discussed how to achieve efficiency in their IT budgets and best utilize their resources. In my experience, there’s an optimal size for outsourcing–too much risks brittleness in the supply chain, yet too little indicates overspending.
While Council members range from outsourcing more than half of their IT staff to none at all, the happy place right now seems to be somewhere around 18%. I’d also recommend a mixture of offshoring and nearshoring for banks that are considering outsourcing but are wary of having external staff all in one region. Western Canada is one region that banks are hiring from to achieve a compromise with staff closer by in North America.
During a difficult time for the economy, some Research Council members suggested funding new projects by repurposing their IT spend. Older vendors and software can be downsized if they are no longer needed for their original purpose, and that spend may be repurposed into 2023 initiatives. Areas of interest for banks in 2023 include operational data stores, such as data warehouses and data lakes, and customer onboarding systems.
How You Can Get Involved
The agenda of each quarterly meeting is driven by Research Council members’ interests and priorities. On February 16, we’ll meet for our first quarterly meeting of 2023. Click here to learn more about our Q1 2023 meeting.
Budgeting season is the time of year for CIOs, CTOs, and heads of architecture to examine the bigger picture, including the priorities, challenges, and plans of the IT organization as a whole. If you need advice on creating strategic artifacts such as a blueprint, roadmap, or current state assessment, email me at [email protected], and I’ll reach out to schedule an introductory conversation about the Research Council and our FS CIO/CTO Advisory Practice.
