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Tech Spending in 2009 to Be Trimmed, Not Slashed

Bank technology executives acknowledge that 2009 will be lean, but they're hopeful that it won't be too mean.

Virtual Money Saver

Pelaez and McLeod share one thing in common on their 2009 wish lists: virtualization technology. Virtualization, a method for running multiple independent virtual operating systems on a single physical server, is an example of a technology that's both eco-friendly and economical.

Some question whether trendy technology initiatives, such as going green or mobile banking, will stay on the agenda now that the industry (to join the chorus) is going "back to basics." Yet forward-looking banks see such investments as both practical currently (partly through virtualization, The Bank of New York Mellon reportedly saved up to 27 percent on energy bills for its newer data-processing centers) and important in future positioning.

"Virtualization is part of our overall technology strategic plan," BankPlus' McLeod says. "Certainly the costs will be continually monitored, but the advantages and long-term potential savings will win out. As older servers need replacement we will use virtualization to reduce hardware and energy costs, improve our ability to support the IT infrastructure, and simplify disaster recovery."

First California's Pelaez would like to see bank employees, particularly tellers, move to virtual PCs. But while each costs about half of what a traditional PC costs, in addition to offering other benefits, Pelaez notes that the move will occur only "as machines need to be replaced."

Similarly First California has curtailed other rollouts. "We're looking at replacing traditional handsets with voice over IP. Originally we were looking at the entire bank," Pelaez relates. "Now, if it breaks, we'll fix it."

One technology that won't be put on ice in 2009, according to sources, is mobile banking. Brandon McGee, VP and senior product manager for mobile banking with The Huntington National Bank ($55 billion in assets), says the Columbus, Ohio-based institution, the 23rd-largest U.S. bank by assets, "is very committed to the mobile channel." He adds, "In fact, our commitment will be demonstrated in 2009 by the launch of two custom-built solutions -- text banking and text alerts."

Upwardly Mobile

McGee, who has a good sense of what is happening in the mobile space -- both through his m-banking blog,, and through the Bankers Alliance for the Mobile Arena (BAMA), a group of 71 bank members that he hosts on LinkedIn -- adds that he doesn't get a sense that m-banking is viewed throughout the industry as a "luxury product" subject to be cut. "There's no change in attitude toward mobile banking," he says, adding, "It helps you reduce expenses." For example, Huntington has used m-banking to replace some calls to the call center, which could cost up to $6 each.

The Bank of New York Mellon ($205 billion in assets) has both m-banking and Web 2.0 initiatives on the agenda for 2009, according to Ron Stewart, CIO for the New York-based firm's treasury services group. "Areas we'll be focusing on during 2009 include continued advancements in information reporting and customer dashboards to provide real-time, integrated information; mobile platform access; increased cross-platform integration; increased client self-service options; and increased foreign language capabilities to support our growing global customer base," he reports. (The bank is the world's largest asset manager, servicing almost $23 trillion in assets.) "Specific technologies that will help us include portal technology, advanced reporting technologies supporting customer ad hoc requests, and Web 2.0 supporting mobile access and collaboration."

Noting that "The specifics of our IT spend for 2009 are proprietary," Stewart adds, "Because technology plays such a central role in our business, our level of investment will continue to be substantial. Finding opportunities to reduce expenses will be important, but even more important will be making sure that we fully leverage the investments we're making."

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