Bankers frequently ask technology consultant Jeremy Neuharth how their technology compares to other institutions. When requesting such comparisons, Neuharth said, what bankers really want to know is if the technology investments they’ve made are worth it. “They want validation,” he said.
Decision-making around technology is complicated, explained Neuharth, a former banker and self-described “geek” who founded Fargo, N.D.-based Sycorr in 2010. Neuharth cut to the heart of that challenge by developing a Disruption Decision Matrix, which he explained Sept. 20 in webinar titled Leveraging Technology: Questions you Should Ask Before Spending a Dime. The webinar was sponsored by BankBeatGroups.
Technology is changing how we do business, Neuharth said. The matrix he designed allows bankers to cut through the noise and focus their attention on the technologies (defined as “applying methods and knowledge to a process”) that will bring enough benefits to an organization that they are deemed worth the disruption they cause. In other words, the matrix provides validation.
The matrix is a square partitioned into four equal quadrants with a Y and an X axis. The axis data points are numbered from zero to 3 starting at the lower right corner. The vertical Y axis is labeled VALUE and the horizontal X axis is labeled ABILITY TO CHANGE. For each axis, three Yes-or-No questions are posed with answers assigned a value: Yes = 1; No = 0.
The VALUE questions are:
- Will the technology decrease risk to individuals or the bank?
- Will the technology increase efficiency (with cost or time savings)?
- Will the technology increase opportunities in terms of gaining new markets or increasing market share?
The ABILITY TO CHANGE questions are:
- Does the technology allow for flexibility? In other words, how locked in are people or the bank into a particular solution or model?
- How difficult is the solution? Will solving a particular problem require expensive outside consultants or can team members puzzle their way through?
- What’s your level of influence? Can you make the decision yourself or do you have a path to the decision-maker?
Once all six questions are answered, Neuharth instructed, scores should be plotted. The lower left quadrant of the matrix is labeled AVOID; the upper left quadrant is labeled ADVOCATE; the lower right, REINVENT, and the upper right quadrant, STRATEGIC FOCUS.
Solutions that have value but won’t bring about change tend to land in the ADVOCATE quadrant, Neuharth said. Solutions that land in the REINVENT quadrant should be kept on a list for future consideration. Technology solutions that land in the upper right quadrant should be the focus of detailed discussions. “By pre-sorting your ideas using the matrix, you are able to focus on the best options. This is where you should spend the bulk of your time.”
Using the matrix, Neuharth said he helped a bank client examine 70 core system modifications from which the bank wasn’t sure it was deriving value. “We spent four days reviewing; we did a DDM for each one,” he said. “Once we sorted, we could have in-depth discussions about those things in the upper right, sort through the noise, validate decisions.”
That client decided to eliminate 60 percent of the modifications as a result and it reaped savings of roughly $100,000, Neuharth said.