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IT labor shortage hits banks
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September 24, 1998 by Ellen Messmer |
From...
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NEW YORK (IDG) -- Sure, the year 2000 is a problem. But even more troubling is the increasing difficulty in finding skilled staff to run and build networks and applications, say IS executives from the banking and insurance industries.
They gathered last week at the 7th Annual Financial Technology Expo here to share their views on building internal systems and on planning for electronic commerce, saying they see trouble on both fronts.
It has gotten so bad, one company has actually begun looking for new IS recruits among the high school set.
"We not only have alliances with colleges, we've gone down to the high schools, and given the students aptitude tests," said John Beran, chief information officer at Comerica in Detroit. "This also assists us in our diversity goals." Comerica even offers home mortgages at special low rates to employees as long they stay with the firm.
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"The No. 1 issue is the year 2000, and it's a serious issue," said Beran, whose views were echoed by Merrill Lynch CIO Edward Goldberg and Richard Ranelli, Wellpoint Health Networks senior vice president, during the CIO roundtable discussion at the conference.
But Mel Taub, senior executive vice president and director of operations and IS at Salomon Smith Barney, said, "We're constantly worrying about recruiting and retaining staff and motivating them."
Salomon faces a formidable application integration effort in its merger with Citibank, Taub said.
"I worry about my network being up seven days a week," Goldberg said But with more and more challenges finding qualified staffers on the outside, Merrill Lynch has beefed up in-house training and recruiting efforts on college campuses.
SET gets a setback
The banking industry is no stranger to electronic commerce, having invented the large number of credit card, check and wire payment transfers today handled on separate, proprietary networks. But banks are struggling with how to adapt the old ways to the Internet and expand their contacts with individual consumers and the business customer.
"These payment systems require considerable infrastructure stemming from the method of payment," Beran said. "We estimated we could cut $6 billion in costs if we could just merge some of these [payment methods]."
But cultural inertia in the banking industry and regulatory burdens so far have stymied movement toward integrated IP-based processing. Comerica itself is redesigning its traditional cash management services to be Web-enabled and has begun investing in business-to-business Web sites. One of these Web sites under development would let construction professionals, such as electricians and plumbers, locate each other based on skills and location. Though banks and brokerage firms are steadily expanding the financial services they provide online, one industry effort started more than two years ago, called Secure Electronic Transactions (SET), came under harsh criticism last week.
Devised by MasterCard International and Visa International with help from vendors such as Microsoft, Netscape and IBM, the SET 1.0 specification defines how to process credit cards on the Internet. With SET, the consumer, the online merchant and the bank use digital certificates to identify themselves and encrypt credit card data. SET requires the online buyer to have a SET-based electronic wallet with a SET digital certificate from Visa or MasterCard and the bank.
Though SET is making headway in some foreign countries, U.S.-based banks have complained about some performance problems and the slowness of SET interoperability testing among vendors.
Chase Manhattan Bank blasted MasterCard, Visa and industry vendors for the way the Internet credit-card processing standard is evolving, even as MasterCard backed down from deploying SET until mid-1999.
"We just killed off SET 1.0," said Mark Cantor, vice president of electronic commerce at Chase Manhattan.
The SET initiative "was driven by the technology companies and the popular press," Cantor said. "SET was developed due to the perception on the part of consumers that the Internet isn't secure. That perception has gone away. Commerce is going on in a perfectly adequate way," with SSL browser encryption.
Chase Manhattan does have interest in SET 2.0, however, which though still on the drawing board, is said to include micropayments and a way to encrypt credit-card data using smart cards.
Chase is looking closely at SET 2.0 smart cards, but the fact that Visa and MasterCard are endorsing different card operating systems is causing concerns, Cantor said.
MasterCard is backing the Open Multi-Application OS (MULTOS), based on C++, while Visa wants a Java-based chip card.
Many of the point-of-sale (POS) terminals used to process magnetic-strip credit cards can be easily upgraded to support smart cards, Cantor said. But having to upgrade POS devices to support two different operating systems is plainly a bad idea, Cantor said.
"The merchant terminal would have to read both systems, and our tests have shown this can be kludgy," Cantor said. "MULTOS vs. Java is going to slow adoption of this product so we hope Visa and MasterCard change and come to an agreement about this."
When asked about plans for SET 1.0, Arthur Kranzley, MasterCard's senior vice president for electronic commerce, said MasterCard and the banks won't distribute digital certificates to consumers until next summer, after Microsoft ships Internet Explorer 5.0 with SET support.