Banks spend a lot on IT but its a mess

Living and working in London means a lot of the software people I meet and talk to work in financial services. It amazes me the number of programmers etc. that banks employ. And you hear stories, some really awful stories about the state of IT in banks. And I’ve seen a few in my time.

So, for all those readers out there who have to work with banks and other financial services companies I recommend you get hold of a copy of this weeks Economist and read “Silo but deadly.” This article lends some weight to those stories I hear in pubs, at conferences and during training courses.

Some highlights:

• Financial services companies are estimated to spend $503bn on IT this year, thats more than Governments, more than manufacturing and more than any other sector
• The chief risk officer at Deutsche Bank says: “Banks are essentially technology firms”
• SOA architecture is a problem, that’s Spreadsheet Oriented Architecture
• Data quality is a recognised problem

The articles suggests that the woeful state of IT in banks may have contributed to the recent problems. This is something I’ve suggested other links before now, e.g. the Moody’s bug.

Personally, I think one of the reasons why banks and other financial companies have such poor IT goes back to that quote above: Banks are technology firms but they don’t view themselves that way. As a result the way they don’t necessarily take the right approach to people or projects, and they don’t take the right short-term v. long-term view and so on.

Lest we get too negative about our industry you might also want to read this recent survey from McKinsey which suggests IT isn’t doing such a bad job, and outside the IT department corporations are pretty happy with IT on the whole.