ABA Banking Journal - January 2009 - (Page 34)
Tech topics I t was 2006. Jay McLaughlin was hired to head IT and immediately saw some operational areas he wanted to fix at $1.5 billion assets, Orlando-based CNLBank. Few were more pertinent than email security. “Information has to be encrypted to meet GLBA compliance and for practical reasons,” McLaughlin says, referring to the Gramm-Leach-Bliley Act. By last November, the senior vice-president of information technology had evaluated several vendors and had nearly decided about the contract. The bank was coming up on an audit and the information SVP wanted to make sure that day-to-day electronic communications weren’t exposed to viruses or other threats that might not sit well with examiners. McLaughlin had full authorization over both the security and architectural purchases, which made his project management and purchasing process more manageable than many big banks experience with their numerous layers of technology personnel. “Management of e-mail needed to be automated,” says McLaughlin. “I wanted a full range of encryption and monitoring functions. It’s hard with a small staff to stay on top of new virus signatures and other threats.” One vendor on the short list was San Carlos, Calif-based Postini. “We looked at several vendors with offerings but liked this firm’s products,” he adds. Adding to the appeal was the September 2007 acquisition by search engine juggernaut Google. In the days of McLaughlin’s e-mail security product evaluation, Google had joined the chorus of premier technology firms promoting a methodology known as “computing in the cloud,” that is, rendering a given IT function into a utility of sorts to be remotely consumed by a bank. (See Webnotes, Sept. 2008, p.50.) Generally, says Google Apps Security product manager Adam Swindler, the upside of this approach includes the ability to easily move virus monitoring, spam protection, and software updates outside the bank, which allows a lean bank IT staff to concentrate on strategic projects. Of course, in one sense, that is the value proposition of any outsourcing con- Case-in-point tract, but there are inherent efficiencies in this particular form of technology consumption, offering as it does a particular brand of component computing that lets a bank control everything behind its firewall except the outsourced task in question. It’s also a very affordable way to go. There are other perks. Since the majority of e-mail is spam, removing it before it hits internal systems (something a cloud approach supports) reduces network traffic and, therefore, hardware requirements. Moreover, Google’s real-time monitoring of billions of connections daily means that internet schemes spotted in the most remote folds of the web can be quickly screened against. “There are other fringe benefits,” says CNL’s McLaughlin. “For example if there is a hiccup and e-mail goes down for a while, the application saves all incoming, consumer e-mails,” he says. “None of them will bounce, which could be embarrassing for the bank.” Reports, he related, are also intuitive and easy to obtain. “Basically, I’ve got all these e-mail security specialists working for me without the staff.” BJ Securing e-mail in the cloud says Mary Beth Sullivan, managing partner, Capital Performance Group, LLC. “It’s not sufficient to rely on generic marketing—that will be only more true in the current environment.” Targeting, of course, requires some investment in analytics and a customer relationship management technology (to facilitate a more organized, documented electronic selling and marketing process), which many large banks invested in previously, but with which most community banks need to play catch-up. Making things stretch, strategically You could be tempted to guess which banks will buy what (or hold off) by grouping them by asset size. Yet after a turbulent 2008, such methodology seems passé. The credit tsunami has spun out banks into: 1. The immensely challenged; 2. the community bank beneficiaries of a floating (some say fleeing) customer base looking for security and relationship; and 3. the survivors, which never touched exotic lending or investing but may be doing business in troubled region. 34 JANUARY 2009/ABA BANKING JOURNAL The crisis has been harrowing, but it’s also been a tonic of sorts—at least that’s how Gartner’s tech watchers are opting to view it. “What’s interesting about this period in banking is that there are no sacred cows,” says Cournoyer. “Everyone will be cautious in the immediate future, sure. But by the late 2nd quarter or early 3rd quarter, what we think will happen will be a willingness to rethink operations and plan for something really transformational, into 2010.” She offers such examples as work in software as a service (SAAS) to cut application redundancy—or upgrades to make channels function more efficiently. Revenue centers, such as payments, are another functional area offered up as a candidate for improvement. And, security-related IT spending may also get the nod. “Certainly,” says Cournoyer, “much of this will depend on the timing of recovery, but still, we’re cautiously optimistic that crisis will be a time of opportunity.” Cisco’s Jim Greene admits that the global recession “continues to humble everyone.” Still, a recent retail technology trade show had more than a few attendees express interest in such schemes as setting up “remote experts,” that could be popped in on demand. (This is an approach that requires network upgrades to support voice over IP (VoIP). Cournoyer points out that such “frontier” spending by banks that are on today’s fast track (by reason of not being hobbled financially) might well emerge— after a growth spurt—larger, stronger, with a more loyal customer base, having picked them up with a CRM-assisted strategy that supports making more relevant offers and a life-event approach to selling. “Banks will also need to think about ongoing experimentation with Web 2.0,” says Financial Insight’s Capachin. “Even though they face a tough economy, today’s young people will expect certain online experiences from their bank over the next several years. After all, it is a key face of the institution.” BJ Subscribe at www.ababj.com
Table of Contents for the Digital Edition of ABA Banking Journal - January 2009
ABA Banking Journal - January 2009
Sobering Issues Dominate Industry Meeting
Poll Highlights Banker Views
ABA Chairman’s Position
AgPulse 2025: Our allies... the Farm Credit System?
Cover Story: The Challenge Ahead
Bank Insurance Report - Proof Required
Got TARP? You Need a Game Plan to Go with It
To Advertise/Index of Advertisers
ABA Banking Journal - January 2009
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