Why In-House IT May Be Too Old-School for Your Financial Institution

January 21, 2020 | Article

Remember in the good ol’ days where you went out on a Friday night to the local video store to rent that movie that everyone was talking about? You went to the first store, and they were out. You decided to drive the 10 minutes to the other store, and they had it! You grabbed some snacks and drinks for the family and went home to enjoy the movie. You had to watch it that night, too, as it was a new release. If you didn’t, you would get charged extra!

Many who remember this kind of movie night may say it was a highlight of the week. It did make memories, but was it the most efficient way to get your entertainment fix? Today, the time, effort and risk it took to make this movie night happen compared to current internet and streaming options is off the charts! And, truth be told, there’s a similar situation going on in banking today with in-house IT versus moving to a data center.

In-House IT Services
When I first started calling on community banking institutions in the Midwest, every one of them had their IT solutions in-house. Their servers and software were owned by them, and their staff had to make sure all updates were installed. They had servers for their core system, item processing, document imaging and more, making them need someone on staff to handle IT-related items.

And, back then, most banks and credit unions thought it was necessary to be in-house with all systems. By doing this, they had full control on when they ran their update for the day, which gave their account holders the chance of getting same-day credit if they made a deposit by 3 p.m. Was that efficient for the financial institution? And more importantly, was that efficient for the account holder? Remember, this was before mobile deposit.

Going back to the movie night example, what would you prefer? Traveling to go pick a movie, or subscribing to a streaming service? Personally, I am opting for the streaming service every time. So, why wouldn’t you go for an “on-demand” service like a data center for your financial institution?

A Simple, Smarter CECL Solution
Our spreadsheet CECL model delivers ease of use with customization to fit your needs.

Drawbacks of In-House IT
The effort in going out to get a movie is a bit different than maintaining your own servers. For one, your staff needs the expertise in choosing and maintaining hardware. Many institutions just do not have the availability of hiring experienced technical staff and must train from within. Many times, this staff person has other job duties within the bank that take away from the attention that most in-house systems need. This creates issues, as it is a lot to handle for one person at a community bank.

There’s also an equipment risk factor to consider as well. Back to our movie night, by having DVD players (or VCRs if you remember those), you have more equipment to malfunction and cause issues when it matters most. That is the same thing with being in-house with your processing solutions—issues happen and affect your account holders when they need those systems most. Currently, if you had an issue, how does it get handled? Does someone have to drive to the bank to address the issue? This might be after they spent an hour or two at home trying to fix the issue remotely, all while your account holders wonder why they can’t make payments in bill pay or see their balances on their phone.

I have had many conversations with President’s and CEO’s that thought of these and other possible issues day and night. It wasn’t just about debits and credits, it was about the overall “safety” of their bank. Have they done enough on penetration testing? Is their software up to date? Do they have the most current firewalls? Should they have gone with a new server before their old one failed? These executives had more “peace of mind” on these items once they moved to a data center.

This isn’t the most technical article on the benefits of moving to a data center, but I thought it may relate to you and your organization more than a pile of stats—though we have those too. If you want to explore the possibilities of what a data center can do to free up time at your organization, our team can help you determine the best options for your situation.

Now, which movie should I stream tonight?

Inspired to Create a Strong Future
We have in-depth expertise in the areas that matter most to your institution.

Stay current on your favorite topics


Learn More

See what more we can bring to organizations just like yours.

Financial Institutions

Take a deeper dive into this Insight’s subject matter.

Financial Institutions