The Financial Services 40: Tracking Innovation In Financial Services

Metrics Matter

Insurers and other financial institutions also are turning to some outside metrics to evaluate the performance of IT investments. Sixty-five percent of insurers and 79 percent of bank/financial services executives participating in the study said their firms are using the Balanced Scorecard method, followed by Six Sigma (32 percent of insurers, 49 percent of bankers), Capability Maturity Model for Software (SW-CMM; 29 percent of insurers, 33 percent of bankers) and Capability Maturity Model Integration (CMMI; 29 percent and 27 percent for insurance and banking, respectively).

No doubt much of the effort to track results is tied to IT investments that are required to comply with a host of both new and long-standing regulations. All of the banking/financial services study participants reported that their institutions are taking steps to comply with Sarbanes-Oxley, compared to 83 percent of insurance respondents (see chart, page 43), closely followed by the USA PATRIOT Act, HIPAA and Gramm-Leach-Bliley (Financial Modernization Act).

The requirements - some might say drains - on IT resources imposed by the tighter regulatory environment are paralleled by the growing demands for beefed up security capabilities, and the Financial Services 40 organizations are acting accordingly. Among the most widely deployed technologies/products in insurance and financial services are intrusion-detection software (cited by 94 percent of insurers, 100 percent of banks) and content filtering/anti-spam software (100 percent of insurers, 94 percent of banks). At the same time, other widely used technologies - such as data warehousing (84 percent of insurers, 97 percent of banks), networked storage/SANs (100 percent of insurers, 88 percent of banks), business intelligence tools (84 percent of insurers, 88 percent of banks), Web services (81 percent and 88 percent of insurers and banks, respectively) and content management software (81 percent and 73 percent, respectively) - are critical, not only to compliance and security efforts, but also to revenue-generating initiatives, such as enhanced distribution, product development and cross-selling.

One possible mark of innovation could be an organization's willingness to commit to a new computing environment and embrace Linux or other open-source solutions. But, from the evidence of the InformationWeek research, financial institutions are wading into the Linux waters steadily but gradually (see chart above). While roughly half of all financial services respondents say they are using Linux or open source on Web or intranet servers, other applications of Linux are not being pursued as aggressively.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio

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