Millennials Are Tech-Savvy. Can Your Financial Institution Keep Up?

Millennials using technology
Millennials are now the largest consumer segment in the United States, and their buying behaviors are shaping every segment of the marketplace. Millennials’ expectations are influenced by technology giants like Apple, Google and Amazon. Even industries that have traditionally relied on face-to-face interactions — like education and healthcare — are being transformed by technology.

The financial industry is not immune. Financial institutions are being forced to adopt new technology that provides alternative financial models emphasizing automation and speed. As one article put it, banking for millennials is all about the apps. While big banks might have the wherewithal to adapt their service models to appeal to this tech-savvy generation, you’re having a harder go of it if you’re a small or midsized institution.

Part of the problem is that small IT teams tend to focus more on maintaining back-office technology rather than on new technology to drive the business forward. Sometimes this is out of necessity — compliance and cybersecurity challenges are also a priority, so IT spends time securing systems, servers and sensitive data.

If you don’t adapt to customer demands, however, you’ll lose market share to other, more tech-oriented companies. How do you keep up?

Bimodal IT

In 2014, Gartner coined the controversial concept of bimodal IT. It’s an IT service delivery model in which IT is divided into two separate, coherent modes:
Bimodal IT graphic

  • Stability: This mode involves the operational side of IT, including user support, data backup, etc.
  • Agility: This mode is focused on innovation. It involves experimentation with new technology.

The idea is that by having personnel dedicated to innovation, the business can keep the lights on with stable IT while developing new technology-driven products and services.

Fast and Innovative Business Technology

The concept of bimodal IT set the IT industry abuzz, but not everyone is singing its praises. Forrester, for example, did its own research that says bimodal IT can’t keep up with fast-changing customer and product life cycles. “There is no longer a place for slow IT,” said the principal analyst for the project. To support rapid innovation, everything must be up to date and fast: platforms, processes and personnel.

Gartner or Forrester: Who Has the Best Answer?

There will always be different perspectives on IT management, but in today’s world, there are a couple of principles that ring true across the board:

  • Customer needs must shape the business’s products and services on an ongoing basis.
  • Stable, or slow, IT should not interfere with responding to those needs.

As a smaller institution with limited IT staff, ensuring that technology keeps pace with customer demands is a challenge. Outsourcing basic maintenance functions such as data backup and recovery can help you prioritize meeting industry demands.

For example, a CIO in Spokane, WA realized that by outsourcing data vaulting and recovery, he could keep up with evolving technology, reduce cyber risk, meet his recovery time objectives and reduce costs. In fact, after doing a cost analysis of in-house management versus outsourcing, he found that keeping this function in-house was more expensive due to hiring, benefits, training, PTO and day-to-day maintenance. He also found that it was less efficient — he’d need 1.5 times the personnel required to perform the outsourced functions.

As millennials continue to influence service delivery models, the question is not if you’ll respond to their demands, but how.

To read more about how millennials are impacting your business, read this post.

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