ABA Banking Journal - February 2008 - (Page 52)
Tech topics By Harold “Bud” Boughton. The author has spent the majority of his professional life marketing and selling technologybased solutions to the financial services industry. He now spends most of his time doing freelance writing and professional speaking engagements. He can be contacted at email@example.com 52 FEBRUARY 2008/ABA BANKING JOURNAL PHOTOGRAPHY BY CORBIS IMAGES n May of 2003, Nicholas Carr broke convention with most technology experts and wrote an article for the Harvard Business Review entitled, “IT Doesn’t Matter.” His theme was that information technology had become a commodity. He further stated that it was scarcity, not ubiquity, that makes a business resource truly strategic. Needless to say, Mr. Carr’s article was met with an outcry from the technology community that has always touted IT as being critical to creating competitive advantage. After all, that IT has deep value was and still is very much the “sacred cow” of the technology industry. For years, almost every core banking software vendor has made a similar claim—that their core software solution provides a financial institution with a competitive edge. On the other hand, consultants have often argued that the core systems available to banks today have become a commodity. Being that I spent most of my career selling core banking software systems, I always cringed at this notion. One can, however, see where this thinking has come from. Other than the client/server systems that broke into the marketplace in the early Nineties, no single core banking software provider has introduced anything close to what one might call “revolutionary innovation.” There were graphical user interface I Does Core really matter? (GUI) front ends, open architecture, middleware, service oriented architecture, and Microsoft.net to name a few advances. But, in the absence of any earth-shattering news on the core banking front, one can see how the commodity label has stuck. The argument that core systems create a true competitive advantage for a bank stems back to the late seventies and early eighties. It was then that small, more affordable mini-computers became available and community banking systems which ran on these systems came into vogue. It was a new alternative that let a community bank “control its own destiny” and have what they believed was true competitive advantage over those institutions who chose to remain with their service bureaus and correspondent processors. But that was then, where are we today? Does Core really matter?
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