Given the huge levels of investment in information technology in recent years, it is hardly surprising that many chief executive officers and business managers have asked whether IT spending has actually made the institution more profitable, or whether additional IT expenses simply erode the firm's net profit. Some have suggested that there is a direct correlation between the level of IT spending that a financial institution engages in and its overall profitability. The argument is as seductive as it is flawed: since IT is becoming so crucial for banks to survive, those firms that invest the most will be the best positioned to reap the benefits that technology offers and will see a direct impact on their bottom line. This is simply not true. Spending more on IT does not guarantee greater profitability. In fact, blindly spending more on information technology is a certain way to decrease profitability. There is nothing magical about IT spending; it is not guaranteed to increase profits.

ROA: spending is not enough

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