COLLABORATION IS the key word in banking these days for describing the relationship between technologists and executive suite.

As financial technology moves increasingly away from mainframe-based systems and into distributed processing environments, technology personnel and lines-of-business managers are being forced to work more closely together than ever.

And recent research indicates that whether it is in the development of new applications, the maintenance of existing systems, or just to assure an institution's technology investments are returning the maximum payoff, the profit-center executive is gaining a greater level of control.

The implications raised by the move to client-server distributed architectures are numerous. Redeployment of personnel, training, budgeting, and the changing role of the chief technology officer are just a few of the many issues with which banks must deal today.

"It's a natural evolution," said Jonathan Palmer, chief technology executive at Barnett Banks Inc., Jacksonville, Fla. "As we move more into distributed processing and as people who are running the business units get more technology-literate, we're developing more of a working relationship between the two areas.

"Technology strategy is becoming much more integral to business strategy," he said.

The results of the 1994 American Banker/Tower Group/Andersen Consulting survey of technology in banking confirm this analysis.

The survey of 150 top U.S. banks uncovered a growing trend towards having bank technology personnel report to line of business managers instead of a centralized information technology unit.

Last year, 15,480 of a total of 86,000 bank technology personnel reported to business unit managers. This year, although the number of overall bank technology personnel remained flat, the number reporting to a line of business manager grew 16%, to 18,012.

Not only are the techies reporting to new managers, but they're also performing new duties. Distributed computing applications development is the fastest-growing bank personnel function, growing at a compounded annual growth rate of 31.9% between 1992 and 1997, according to the survey. User support and training is another fast-growing area, with a 9.93% compounded annual growth rate for the period.

While. much of the training consists of getting nontechnology personnel up to speed with the software programs they need to do their jobs, there is some retraining of technology personnel who have in the past worked almost exclusively on mainframe systems.

The survey found that the number of technology personnel assigned to develop mainframe-based applications will drop by about 10% from 29,690 this year to 26,560 in 1997. By the year 2021, mainframe applications will probably make up less than 25% of the industry total, according to the survey.

Although some of these jobs are lost to attrition, many of these people are being assigned other duties.

"We have a responsibility, an obligation to see to it that we don't have legacy people," said Mr. Palmer. "It would be suicidal for any organization to think they could dismiss all of their mainframe people and replace them with new client-server people. We have to provide people with the training and the tools they need to make the move into the new environment."

Because technology personnel are increasingly reporting into lines of business, they are being asked to acquire a new set of nontechnology-related skills, like marketing.

"Because information management is moving closer to the user, our IT personnel need more business skills, more analytical skills, more marketing skills," said John L. Cooper, senior vice president and chief information officer at Oklahoma City's Liberty Bancorp. "We're training people with good technology aptitude to learn these necessary business skills. The technology people who are more analytical and able to adapt to the business environment are being paid more."

Tracking technology budgets is becoming much harder as well. Although most bankers agree that collaborating with business units on applications development is a good thing, they feel it makes cost control a much harder job.

"Costs can really spiral out of control when one decentralizes the management of technology," said Kent Seinfeld, senior vice president of strategic technology planning at Philadelphia's CoreStates Financial Corp. "New distributed computing applications do promise added functionality. But I do not see them costing less. Client-server computing is a very people-intensive business, and I'm not sure the industry is doing a particularly good job of tracking the people-related costs."

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The problem, he said, is that the level of end-user support has shot up rapidly, and that banks have not adequately tracked the costs associated with support and training.

For example, he said, some end user support may be completely informal. One user who understands a particular software program may assist an office neighbor who is having trouble with the package. While that definitely counts as user support and training, because it is done so informally, the cost is never accurately accounted for.

Tracking costs may be a problem, but control of technology budgets most definitely is not; the technology departments are happily sharing that job with their counterparts in business units.

"We have evolved into a collaboration" on budgets, said Joseph S. Pendleton 3d, senior vice president of $14.5 billionasset Meridian Bancorp in Reading, Pa. "We split responsibility for determining the budget, depending on the utility. For example, the decision on what applications to buy or develop is mostly with the user."

But, he added, the centralized technology department determines the budget for bankwide technology, including the underlying infrastructure, core systems, telecommunications, and systems -- like relational data bases and customer information files -- that can be used by many lines of business.

There's no question that with the move to client-server architecture and more input from business units in technology, the role of the chief technology officer in the bank is changing.

"The chief technology officer's role will be creating an environment where investment dollars for technology will be leveraged across the organization," said CoreStates' Mr. Seinfeld. "It is a vital, difficult role to play, but critical for the client-server model to succeed.

"The nature of the role of the CTO -- and most of those who work with him or her -- is becoming more of an integrator of systems than a pure developer of applications," he added.

Others agree.

"I think you're seeing the job evolve into a kind of broker, a keeper of the corporate good," said Webb Edwards, executive vice president and manager of the information services unit at $53.5 billion-asset First Interstate Bancorp in Los Angeles. "The CIO will be the custodian of standards. He will keep the underlying infrastructure in place and up-to-date.

"That will be the role of the CIO, rather than actually directing applications development, which will come more from the line of business. The CIO will do more coordination, instead of setting direction," Mr. Edwards said. "It's already happening."

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