If it isn't already, technology will soon be on the minds of community bankers as they plot long-term strategies for survival.

How will technology decisions impact our strategies for potential mergers, acquisitions, or the sale of the bank?

Here are two principles for reinventing your technology strategy.

The bank must commit to a long-term technology plan that directly supports the bank's strategic plan.

An effective reinvention agenda requires both a focused strategic plan and a supporting technology plan.

Ensuring a financial return on new systems will require community banks to integrate technology into their organizations. Throwing money indiscriminately at technology without a plan will actually make a bank less efficient and effective. Community bank CEOs and directors must ensure that their long-term technology plan addresses the following key issues:

*Architecture. The bank should adopt a long-term technology architecture that will allow for the simplified integration of various banking systems. Keeping pace with business and technological change in the years ahead will depend primarily on the adoption of and adherence to a formal technical architecture.

*Infrastructure. Community banks face the need to deploy new PCs and computer networks throughout their organizations. This infrastructure is costly and represents a huge cultural change for the bank. Although this infrastructure is a vital investment for those evolving into virtual banks, the requirements to manage this new environment should not be taken lightly.

*Organization. Community banks must devise strategies to better manage their information resources. They must clearly define the role of the MIS/operations group and ensure that accountability for technology runs throughout the organization. Developing network expertise and strengthening PC skills internally also must be priorities.

*Strategic partner. Community banks must ensure that the partner providing core data processing services will support the organization's evolution to a virtual bank. The successful implementation of a bank's strategic plan will depend greatly upon vendors who can help the bank develop new products, expand delivery channels, and improve service delivery and productivity. Similar to the banking industry, some technology providers will reinvent themselves and others will become victims of industry consolidation. Directors and CEOs need to feel confident they have selected the right partner.

*Strategic alignment. Community banks must focus their technology efforts in a few key areas that will have the maximum impact. To ensure that each of these select initiatives are strategic, the bank must directly tie each technology investment back to a critical corporate strategy. For instance, a PC-based cash management product would align nicely with a bank seeking to grow its small business niche.

*Investment return. Community bank CEOs and directors need to ensure that large-scale technology investments will truly benefit the shareholders. To validate these assumptions, a three- to five-year capital and operating budget should form part of the bank's technology plan. For community banks evolving to virtual banks, the key to this cost justification will be the ability to grow assets and revenues much faster than operating expenses. Directors are often surprised to learn that this type of resource leveraging can increase a community bank's profitability by as much as 50% within five years.

Serious reinvention starts at the top. Too many small banks today are having lukewarm discussions about reinvention while they quietly shop the bank for a buyer. Employees and customers are smart enough to sense when commitment is not real and will act accordingly.

The community banks that survive in the decades ahead will view virtual banking as a priceless entrepreneurial opportunity. They will clearly communicate this message to their employees and share the rewards of their labors.

The directors of these virtual banks will clearly understand their niche strategy and the important role that technology will play. In the final analysis, these banks will view the 1990s not as a period of decline, but rather as the dawning of community banking's latest golden age.

Directors and CEOs face the tough choice between consolidation or reinvention. Though neither is categorically better, those banks that elect reinvention must actively embrace new principles to manage their information technology resources.

Ms. Seymann and Mr. Williams are president and managing director, respectively, of MOne Inc., a technology consultancy in Phoenix.

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