By Art Gillis

In 1987, the Wall Street Journal published a study that evaluated technology in nine industries. Banking got the lowest grade, C-. Nineteen years and about 152 bank tech conventions later, technology is better. We now have GUI front ends. But the back end is still based on '60s technology. What never appeared in the evolution of bank technology was the proverbial clean sheet of paper. No one ever asked, “Why the hell are we even talking about automating this process, when we should be reinventing the process?” R&D in bank technology today is a matter of writing COBOL modifications to existing code. That’s called maintenance, not innovation.

There’s not enough room on this blog to convince everyone that we are still suffering from antiquated architecture, so I’ll refer to one chance observation that makes the point for me. There was an employment ad in a recent issue of the American Banker for an application development manager. That was the first hint that someone should be fired at that bank. Any bank that is building its own software (that’s what application development means) these days is like a bank that is still making loans on waterfront property in Arizona. The next clue listed the experience required. People over the age of 50 will recognize these: COBOL, CICS, DB2, VSAM, and who knows why JAVA.

There’s something wrong with bank technology, folks, and I’ll begin with my profession. 1) Consultants should be disturbing the status quo. 2) Bank examiners should be sending up red flags telling bankers we can’t stand another Y2K. 3) CIOs should be taking a sabbatical in India. 4) At least four vendors that I know should put 200 banks (let’s begin with the big guys) on their priority list called, “How Not to Act Like FEMA,” and 5) Bank CEOs should begin their next management meeting with, “What are we doing to get out of the '60s?” And don’t mention technology. If technology is in the '60s, the whole bank is in the '60s.

Don’t panic, folks. I just thought you might want to get started soon because the trip will take 10 years. And in defense of any possible accusations of hypocrisy, I should tell you I am not an advocate of reckless spending, thanks to my frugal, New England upbringing. I keep my cars for 14 years. I still have the same wife. My suits last forever because I don’t get a chance to wear them much and I bought Brooks Brothers everlasting style. I never pay banking fees because I know how to beat the system (sorry fee income advocates). But every three years, I throw away my technology only because a tickler file tells me to. And I do mean “throw away.” When I tried to donate my discarded PC to my favorite charity, the Dallas Children’s Advocacy Center, the lady asked how old it was and when I said three years, she politely declined. I sent my check in early that year, I was so embarrassed. Here’s a non-profit that has more wisdom than most banks.

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