Pub. 3 2013-2014 Issue 3

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S November • December 2013 19 and return on assets, it is important that banks also carefully consider the full value of the service and the cost of risk. Proximity Local IT outsourcing providers have the added benefit of being in the same city or region as the bank, and this can imply that proximity equals quicker or better service. Some institu- tions view this as a benefit. However, with modern technology, the reality is that having someone physically in the office is not always necessary–in fact, it can be a more expensive and less efficient method for trouble-shooting issues. Imagine for a mo- ment that a system crashes. In the time it takes for a local IT resource to drive to your office, an MSP could start solving the problem almost immediately by logging in remotely through a secure connection. Of course, there are instances where be- ing on-site is a requirement, and many MSPs also offer on-site service. Staffing and Availability Local IT providers create community jobs and can have local relationships with the institutions in their area. But like many small or medium-sized businesses, a local IT provider may be stretched thin during peak service times and after-hours. Unfortunately, sophisticated cybercriminals can attack at any time, meaning banks need coverage around the clock, every day of the year. An MSP is more likely to have the extensive staffing to provide a wide variety of IT specializations and services, like 24x7 security and systems monitoring and mitigation. MSPs also may be less affected as the cost to hire and retain certified IT professionals skyrockets, having the financial fortitude to offer better benefits packages and attract the best talent. Industry Experience Even the smallest banks are subject to the same compliance and technology requirements of the largest banks. While local IT providers may understand technology with a generalist view, bank-focused MSPs are well-versed in the specific regulatory and operational needs of financial institutions, and they often seek out employees who have worked in the banking industry. It also is important to understand how your technology provider, either local or financially focused, is audited. Many bank-focusedMSPs will elect to be audited via an FFIEC-based exam in addition to SOC 1, SOC 2, SSAE 16 and other third-party audits, ensuring the strictest of standards in technology deliv- ery. This becomes especially important when banks consider cloud services. Banks also should look at the ongoing cost of education. How much time will be spent educating the vendor on specific needs and reports required to satisfy examiners? How smoothly will the vendor be able to integrate all of the IT pieces into core systems, loan origination systems and other primary systems? Will the vendor be able tomonitor and report on the data points required to satisfy a regulatory audit? Cost While the local IT provider may have a lower price tag, in most cases, anMSP that specializes in the banking industry will provide amuchmore affordable long-termcost. The cost savings in maintaining compliance and meeting regulatory standards can quickly make up for any initial difference in up-front costs. In addition, bank-focused MSPs understand financial market trends and can provide strategic guidance on technologies that have helped other banks gain efficiencies or offer new services, which may positively impact profitability. In the end, each bankwill have to evaluate their individual IT needs and carefully select the provider that offers the strongest long-term value to their institution. n The key to making the correct selection is to factor in all of the key areas of vendor management, especially in light of available guidance from the FFIEC, while truly evaluating all the elements that go into managing the bank’s technology needs. visit us online! www.coloradobankers.org www.coloradobanke rs.org