Independent Banker - May 2023 - 49

" SYSTEM PROVIDERS
ARE MAKING
DECISIONS IN REAL
TIME WITH SHORTTERM
HORIZONS THAT
OFTEN HAVE TRADEOFFS
THAT PILE UP. "
-Charles E. Potts, ICBA
community
bank's operating
systems are
too outdated,
they can't take
advantage of
these advances.
" They can't
bolt on newer
technology, "
says Johnston.
WHAT COMMUNITY
BANKS CAN DO
ABOUT TECHNICAL
DEBT
If a community
bank relies
fully on tech
debt-laden
vendors instead
of those who
create nimble
cloud-based
applications
(see sidebar,
page 48), it will
be in trouble.
That's true even if the bank thinks it's delivering the right
solutions. While 80% of companies believe they deliver
" super " experiences, only 8% of customers agree, according
to a study from Bain & Company.
Whether community banks outsource their technology to
third-party vendors, run the operations on their own or use
a mix of both, the weight of tech debt can feel like a crisis
with no way out. They might also still rely on a software
or platform that was quickly implemented at the time to
fix a pressing problem but hasn't been revisited since, says
Davey. " Over time, it accumulates until it almost becomes a
bailout situation. "
Financial resources to require talent, or enough talent, to
fix the problem can be costly. " It leaves them in a position
where they're not managing the transformation into
digital services, " he says. That includes technologies like
AI and machine learning that big banks already have, and
their fellow competitor community banks may have, now
or shortly.
" They're just bailing water, " Davey says. And it's
exhausting: According to Forrester Analytics, 18% of IT
leaders said that their biggest software challenge is that
technical debt takes energy from innovation.
There's still plenty of opportunity for community banks
to pull themselves out of technical debt. To start, they can
figure out where their debt is, whether it's with systems
they still run themselves or with their vendors.
For in-house technical debt, this will require mapping
out an operations system, which will help banks
understand how that operating system works. This process
can show them everything they're paying for, such as
outdated software, obsolete patches, security flaws and
gaps in customer experience.
THE BENEFITS OF PARTNERSHIP
With a robust IT staff, directed by a leadership team
that understands the urgency of addressing technical
staff, community banks could do this on their own. More
likely, though, they'll want to partner with a consultant
that specializes in this kind of digital transformation.
They could also get involved with the ICBA ThinkTECH
Accelerator program, which connects community banks
with debtless financial technology vendors.
Through this program, Potts says, community banks
benefit from having access to leaders of companies
creating these cuttingedge
technologies that
don't have the same
baggage of technical
debt as core vendors.
They can also help these
companies shape their
offerings specifically for
community bank needs.
" These new players can
come in and move faster
and more efficiently,
and we sought to figure
out how to find solution
providers that can address
these new needs, " Potts
says. The result is a " lot
of really good, innovative
solutions that bankers can
adopt and put in place to
move more quickly. "
ThinkTECH is
" bringing what's
available in technology
to the community
banks, " says Falk, whose
company is a 2019
alum of the program.
" There's been a lot more
discussion from the
community bank side of
'here's the kind of things
we're seeing and here's
what we're looking for.' "
These kinds of
20%
of technical budgets
earmarked for new
products is actually
going to address tech
debt, say 30% of CIOs
of the value of
CIOs' technology
estates accounts
for technical debt
independentbanker.org // 49
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Independent Banker - May 2023

Table of Contents for the Digital Edition of Independent Banker - May 2023
