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Banking: The IT Paradox
Retail banking increased its information technology investments in the late 1990s, when productivity in the broader economy was accelerating, yet its own rates of productivity growth declined. The blame lies with a host of IT investments that failed to deliver as planned. At many banks, for example, pricey customer-relationship-management tools haven’t boosted the profitability of accounts, nor have more complex, IT-enabled product bundles increased consumer satisfaction. Unlike investments that streamline specific processes (for instance, check-imaging technology), most of the banks' IT spending was aimed at revenue-enhancement activities that have yet to pay off.
The take-away: The experience of retail banks shows that investing in IT doesn’t guarantee improved efficiency when generic IT solutions are applied to support functions or IT simply represents a "me-too" investment.
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