In-House vs. Outsourced IT for Your Financial Institution

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Some of you may remember in the good ol’ days when you went out on a Friday night to the local video store to rent the latest popular movie. Sometimes, you went to the first store, and the movie was out of stock, so you had to decide 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.

Today, it may be hard to even fathom the time, effort and risk it took to make this movie night happen — now, we can go online or pull up a streaming service to start a movie almost instantly! How did we ever deal with such a clunky process? The same can be said in the financial institutions industry today when it comes to comparing the old ways of in-house IT to outsourcing those services.

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, and this meant that they needed someone on staff to handle IT-related items.

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. But was that truly 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 up a movie that may not be in stock, or subscribing to a streaming service to have all the options instantly at your fingertips? 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?

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Drawbacks of In-House IT

The effort in going out to get a movie is a bit different than the effort it takes to maintain your own servers. For one, your staff needs the expertise in choosing and maintaining hardware. Many institutions just do not have the capability to hire experienced technical staff, which means they must train from within. And many times, this staff person who is being trained 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, using DVD players (or VCRs, if you remember those), means you have more equipment that can malfunction and cause issues when it matters most. The same thing applies when hosting your processing solutions in-house; hardware issues happen and affect your account holders when they need those systems most.

If your IT is handled in-house, do you have a plan in place for what happens when an issue arises? For that plan to be put in action, will someone have to take the time to drive to the bank to address the issue? And will that occur after they’ve already spent an hour or two trying to fix the issue remotely? All of these things cost you precious time while your account holders are left wondering why they can’t make payments in bill pay or see their balances on their phone.

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I have had many conversations with Presidents and CEOs who have considered these and other possible issues and were filled with concern. It isn’t just about debits and credits, it’s about the overall safety of their bank. Have they done enough penetration testing to ensure the bank is as protected as possible from the latest cyberthreats? Is their software up to date? Do they have the most current firewalls set up? Should they go with a new server before their old one fails and causes extensive downtime of their website and services? When IT is handled at a data center, someone else stays on top of these concerns, which adds peace of mind and takes a lot off of leadership’s plate.

This is just a broad overview of the benefits of moving to a data center; we’ve got all the stats and technical information to back this up, but at the end of the day, I wanted to share the simple biggest impact on you and your staff: outsourcing your IT services allows you to have more support with less stress.

Once that’s off your plate, your biggest concern will be choosing which movie to stream!

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.


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