One question we always ask is if we are spending enough on technology? After that question, we get confused and mired in the quicksand of financial reporting, finance philosophy and technology strategy. “Technology” is so pervasive that it is difficult to determine what the difference is between spending on “digital” projects versus “analog” projects. For instance, if we upgrade our phone system from dedicated copper to fiber optics that is an analog project but if we convert over to a slower voice-over-IP system is that a digital project?
The key to successful bank spending is having a solid framework to help articulate and execute a set of clear priorities. Since every bank starts at different a place, with different objectives, and with different resources, the best way to do this, that we have found, is to form a scorecard or algorithm and then force each initiative or project through on an annual basis. What emerges should be a prioritized list of projects that the bank can expend resources to achieve that will give them the best return for the least amount of risk.
One common question for banks is how much to spend on innovation and technology. We are not sure that is the right question as it all depends on your vision for your bank and what you are trying to get accomplished. Some banks are sacrificing material current year earnings in order to transform their bank while some banks are spending the bare minimum. For 2018, bank spending on technology is expected to grow 4% over 2017 spending.