Thoughts From IBM's Banking Analyst Briefing

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I attended IBM’s banking analyst briefing this week, held at their Watson Research Center in Hawthorne, NY. I went, expecting three things: 1) buttoned-down IT strategies and frameworks; 2) innovative technology developments; and 3) really smart people. My expectations were met.

I won’t go into the detail of the presentations and technologies here — instead, I’ll share my thoughts from the day:

1) The financial services industry has got a bad case of bunker mentality. Appropriately, IBM has put a lot of focus and energy in the areas of security, risk management, and fraud prevention/detection. There’s no denying that these are top tier issues for financial firms to wrestle with. But industries and firms — just like individuals — have an attention capacity. And I would argue that a lot of the industry’s attention span is taken up with security, risk, and fraud issues at the expense of customer-related improvement and innovation.

I’m not saying that everyone should play “student body right” and completely shift their focus from the former issues to the latter ones. But I couldn’t help but conclude from listening to the presentations that the industry is suffering from a bunker mentality.

2) Technology developments are way ahead of the financial services industry’s ability to appropriately deploy those developments. The bunker mentality is definitely contributing to the industry’s inability to keep up with customer-focused technology developments. And it’s not even like what IBM demonstrated was whiz-bang, 22nd century kind of stuff. But in an industry like FS where, on the one hand, firms are investing millions of dollars to get their customers to transact and interact online, I’m having trouble understanding how these same firms can justify investments in the branch- and teller-related technologies that IBM demonstrated.

3) Reality has come to financial services. IBM conducted a research study of more than 1,000 CEOs, of which somewhere close to 300 were from banks. The number one theme that emerged from its analysis of this subset was that the financial services industry is an “era of turbulence.” Translated from researchese to English, it roughly means “my peers are all getting fired, please God don’t let me be next.” Seriously, though, this finding is a welcome change from the “year of the customer” crap that has emerged from so many other studies (not necessarily from IBM).

A couple of great comments were made regarding this “reality”. One of the presenters, who works at the research center, said “you can’t sue your way out of a technology trend.” Another exec, IBM’s financial services operations strategy leader, said “a number of banks have shown a lot of hubris over the past few years.” He named names — but I won’t repeat them here.

4) Financial services firms need new cross-industry reference points. I don’t know about you, but I’m sick and tired of seeing banks turning to the retail industry (especially Starbucks, where the lines are too damn long, and the product quality isn’t that great), for expertise and learnings from the industry’s “great customer experiences.” People don’t want to hang out in bank branches, drink coffee, and log in to wi-fi connections. The sale and use of the “product”, however, is very different, and the underlying industry trends differ as well.

Thankfully, some of the IBM banking execs commented that they’re looking for new ideas in industries like electronics (for that industry’s globalization, sweeping infrastructure changes, and cultural changes), energy (scenario planning), and media (next generation media content and tools).


Overall, it was a treat to see some of the technology developments that IBM is working on. And sitting in a windowless conference room full of industry analysts wasn’t as painful as I thought it would be.

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