Bank IT budgets are like an 800-pound gorilla-ya gotta feed 'em no matter what the economy does!I discovered, not to my surprise, that some pieces of the IT beast have to be fed, no matter what. Status quo just means no new purchases, but existing resources will cost more in subsequent years just to keep them running. The net result of this hypothetical exercise was that my "typical bank" was going to spend 6.9 percent more on IT in 2009 than in 2008. The line items in my 100 plus line items IT budget in this exercise that caused the increase were:
• Occupancy costs • Vendor maintenance charges (hardware, software, support, special services) • Mandated regulatory compliance • Ad hoc audits that were mandated by the IT Oversight Committee • Contractual commitments agreed to in year one that are coming due in 2009 • Salary increases (albeit modest) of bank personnel who are labeled as IT staff • Arbitrary communications network price increases that were imposed by carriers based on an approved rate increase • Insurance and property tax increases approved by regulatory agencies • Increased processing volumes (if a bank should be so lucky) that propel the bank into the next tier of charges
My typical bank means it didn't make an acquisition, it didn't enjoy a surge in market share, it didn't significantly grow its transaction volumes, it didn't open branches and it didn't enjoy a windfall. A cynic would have called it a dead-end bank somewhere in the middle of Wyoming. Also, in the list of 10 hot apps are some tech innovations that would give any bank CFO cause to break out the champagne-applications that would actually save the bank money on day one. But to maintain the spirit of no new spending, even money-makers like remote deposit, mobile banking, Internet-based cash management and electronic check clearing were not approved in this exercise.
It turns out that in the real world, most banks are not applying for bailout help and are on their steady strategic path of ready-to-serve. Based on a sample of those banks, the anticipated new IT capabilities will add 3 percent to 4 percent to the status quo budget increases.