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February 27, 2004 by Terence Roche Terence Roche

The Gonzo 2004 CIO Curriculum

“The secret to life is honesty and fair dealing.
If you can fake that, you’ve got it made.”
Groucho Marx

Has there ever been a time when bank CIOs dealt with more trends, issues, and projects than they will in 2004? From the left comes migration of almost every system to browser-based, with the bank business managers lining up with purchase/upgrade/migration requests. From the right, much heavier regulatory scrutiny and reporting requirements (has anybody seen the size of an FDIC audit response lately?). From the top, mandates for better integration, better customer experience, more efficiency and lower cost. And, from the bottom aimed you-know-where, legions of hackers with the abilities of an Einstein, the processing power of a small country, a haircut from Mars, the personality of an NFL linebacker (or even worse, a U.S. senator), and a burning desire to get at your data. As the freshman crowd at Central High would say, “Stress city.”

A recent article in Fast Company labeled the life of a manager in the technology sector “free agent nation,” where every person has to turn his/her knowledge and experience into a personal brand as a prerequisite to survival in the industry. The challenge facing bank CIOs is that knowledge goes stale quickly. Most CIOs are as good as the knowledge they have accumulated in the last 12 months.

So what should CIOs be doing to refresh their training? What are key topics? Where do they go to get the knowledge? Well, we have learned one thing from out travels – there is no chance that any CIO can become expert in everything. There is a need to focus on the non-negotiable knowledge needs for 2004.

And, much to nobody’s surprise, we in the House of Gonz have some opinions on where CIOs should focus their education efforts. We have left off some areas that are obvious and already under way – e.g. security, privacy, firewalls, etc. are getting huge focus. Instead, we are going to suggest five maybe-less-obvious subjects that will help keep the 2005 resume lookin’ so fine.

Our non-negotiable 2004 CIO curriculum:

1. Check 21 and its impact on customers and back office
OK, maybe this is also pretty obvious. But it has become clear that all the major check processors are going to start passing everything they can in image format on 12:01 of the first day possible. This is coming like a runaway train. Banks need to be ready to deal with substitute checks, disputes, imaged statements, access to images for every employee/customer, Day 2 processing, and a whole host of changes that are hitting in the fourth quarter. CIOs need to be ready with the details of how this all will work from a technology standpoint.

The good news is that trade groups and vendors are providing a wealth of information through seminars and conferences. Get thy butt to them.

2. Middleware
Integrated channel delivery and CRM in all its forms are still very hot topics in banks. This means that disparate systems will need tight connections for information and transaction processing. As my partner Carl Faulkner has said, understanding XML is just a part of the story. The other big part is understanding and negotiating what data and transaction sets vendors will make available for the middleware solution to access. Cool XML capabilities don’t matter a bit if a vendor only exposes 75 of 2,000 data fields and they’re not the ones you need. The CIO needs to be ready with specific knowledge of what current and potential vendors can and will allow.

Unfortunately, there’s no easy class for this one. CIOs will need to nag vendors and talk to peers to get the real story.

3. Workflow and the Web
Now that we’re past the original idea that the Web is there to double sales and replace branches, we can get on to the exciting opportunity – the Web can automate a huge amount of tasks and facilitate workflow between disparate groups. And it can be done at a very reasonable cost. As an example, look at what the Web has already done to loan workflow. Not only has it automated the passing of work/data between field originators and internal support staff, it is automating the management of relationships with appraisers, title companies, agencies, attorneys, and other parties to the transaction. The benefit is far more than theoretical. In our recent benchmarking report, we saw loan origination staff productivity improve 20 percent to 50 percent in two years, and Web/workflow was a big part of the reason for it.

How can a CIO get knowledge about Web workflow systems and best practices? Peers, conferences, users groups, and lots of phone calls and e-mails.

4. Cost accounting
No matter what the technology or the project, CIOs always face the dreaded CEO/CFO question, “How much is this really costing me?” It’s a fair question. A very important part of future channel delivery strategies will be understanding the true cost of a branch transaction vs. debit, processing a loan application over the Web vs. through a loan office, a Web-based, self service transaction vs. branch or phone. Equally important will be understanding the true cost of a system. When we analyze technology spending for our clients, the biggest surprise to bankers is the total amount of their non-obvious costs, such as line of business employees who spend all their time supporting systems, hidden contractor/third party costs not paid for by IT, and total non-IT time spent in product definition, testing, de-bugging, etc. Nothing will help a CIO and a steering committee prioritize projects more than a consistent, through way of analyzing these costs. As such, it is important for the CIO to fully understand the discipline of creating true, complete costs.

I suggest CIOs sit down with the analysts in the commercial lending groups and see the methodology they use to do financials on a loan deal. While the topic is different, the method might be very useful. This, plus available courses and seminars on cost accounting/ROI, would be a good start.

5. Sales training
Yes, this is a repeat from previous years, and yes, I’m still serious about it. There has never been a bigger need for CIOs to sell their skills, vision, standards, and methodology to other bank managers. Identifying needs, customer-focused presentations, multiple calls and meetings to close the deal, overcoming objections, managing the relationship – sound familiar? Well, that’s exactly what a CIO does. After some formal sales training, the CIO should spend time with the best salesperson at the bank and just watch how he or she deals with customers.

To our CIO readers: Disagree with our non-negotiable list? Well, create your own, sit down with the CEO, and get buy-in for a development plan. Maybe you can become the free agent with the “franchise” tag.

To our CEO readers: Give your CIOs the budget for their development plan. More importantly, give them the time.


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