Banks Planning to Upgrade Profitability Software

Many banks plan to improve over the next year the computer systems that calculate the profitability of their organization and products, according to a recent survey by Hogan Systems Inc. and Price Waterhouse.

While virtually all banks with more than $3 billion in assets have some type of profitability measurement software, few are satisfied with the information they produce, the research also found.

Awareness Is Growing

In the past two years, banks have become increasingly aware of the value of profitability software as a management tool. It allows them to judge their businesses on a consistant basis, whether it is return on assets or return on equity. Dallas-based Hogan, a banking software firm, and Price Waterhouse surveyed executives at 134 banks late last year. The results of the study were released recently.

So bankers plan some key improvements. The most important is the integration of what are typically three separate profitability systems: organization, product, and customer. Bankers, in addition, acknowledge that their profitability systems do not produce profitability figures fast enough to be acted on, a situation they plan to remedy.

Shift in Control

And bankers also want to take the control of the systems out of the hands of technologists and put financial managers in charge.

Nearly half the banks surveyed plan to install a new profitability reporting systems, or significantly enhance their existing system, usually about six years old. Most banks making improvements will focus on product profitability, which chief financial officers deem as the most important of the three types. The payoff for the technology investments is expected to come in the form of more timely reports and a better grasp on which products are unprofitable.

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