THE WOODLANDS, Tex. - Bank information technology officers have a lot on their minds these days.
If they are not staying up nights worrying about security issues, they are stressing over whether their banks are adopting new technology fast enough or might have invested in software on the verge of becoming obsolete.
IT officers voiced these concerns last week at the fifth annual TechMecca conference in this Houston suburb. Hundreds of IT officers attended the conference, which was hosted by the Independent Bankers Association of Texas, the Texas Credit Union League, and Pulse EFT Association.
Topping the list of concerns is security, which includes debit and credit card theft, data breaches, phishing, or fraud losses resulting from identity theft.
"What concerns me most is fraud, mainly from debit card theft or the unintended release of information by one of the [debit card] processors - it's very rampant these days," said Steven C. Harmon, a vice president and cashier at Citizens Bank of Clovis, a unit of the $189 million-asset CBC Inc. in Clovis, N.M.
Last year his bank had to cancel and reissue roughly 100 customer debit cards, after a merchant told the bank's processor that information from 44 million debit cards from numerous institutions could have been compromised.
"One bank had 20,000 cards that could have been compromised, but they decided that it was too expensive to reissue cards," Mr. Harmon said. "However, now they're getting hit with losses" from fraudsters using the stolen information, "and they're now having to pay to both reissue the cards and to cover the losses."
Kevin Mullins, a senior vice president at IBC Bank, a unit of the $10.3 billion-asset International Bancshares Corp. in Laredo, Tex., said he wishes there were a way to conduct two-factor authentication when debit cards are used at automated teller machines or point of sale terminals - much as banks can do when customers use online banking.
"I don't know how doable that is, but we've got to start thinking about it," Mr. Mullins said. "It's an ongoing battle when you can't get in front of the curve - we're always responding to debit card fraud after the fact."
Douglas R. Borchardt, the chief financial officer at Brenham National Bank in Texas, said product obsolescence is another concern for bankers - particularly when they have just invested a lot of money on new applications.
For instance, his bank, a unit of the $181 million-asset Brenham Bancshares Inc., recently bought customer relationship management software, only to be told several months later that the vendor was no longer offering technical support for it. The vendor had sold itself to a larger company that had its own proprietary software and had eliminated the product Brenham was using altogether.
To lessen the chance of future headaches like this, the bank now works with an Austin technology consulting firm that keeps abreast of the technology industry and may be able to warn Brenham of potential pitfalls, he said.
Rick Snyder, an executive vice president at Alliance Bank, a Sulphur Springs unit of the $439 million-asset Texas Security First Bancshares Inc., said he worries that if his bank spends heavily on implementing the latest innovations, customers may not even use or like them.
Stan Webb, the vice president of technology at the $1.8 billion-asset Woodforest National Bank in The Woodlands, said its IT crew is grappling with a much different kind of challenge: finding competent vendors in its new markets.
The Woodforest Financial Group Inc. unit, which has dozens of branches in Wal-Mart stores in Texas, recently began opening others in Wal-Marts in Virginia and North Carolina. Woodforest generally installs stand-alone ATMs in the stores while the branches are being built, and it says one of its biggest challenges is finding local vendors that can service the ATMs and quickly supply them with cash. Most vendors want long-term contracts, but Woodforest needs them to supply cash only for about six weeks, until the full-service branches open.
"One thing that we can do is offer vendors subsequent contracts to service the ATMs of the in-store branches when they open, even though we can handle the cash management ourselves," Mr. Webb said. "It's a challenge finding vendors who are willing to work within our model."
Robert Buckner, the chief information officer at the $2.7 billion-asset PlainsCapital Corp. in Dallas, said that even though technology innovations are getting more and more sophisticated, the concerns surrounding the implementation remain the same - "the speed in which we roll them out before our competitors, the risk that the products won't work, and the risk of the bad guys trying to break into the product."
