Big banks may be considered too big to fail, but their size and operational complexity create performance drags that could also make them too big to succeed, according to analyst house Gartner.
Exponential increases in demand for IT resources at the biggest banks are overturning classic models of economies of scale to usher in a new 'law of diminishing IT returns', says Gartner.
David Furlonger, vice president and distinguished analyst at Gartner, says: "Gartner's data continues to show that these supposed economies of scale are actually being overwhelmed at big banks - typically those with annual revenue greater than $10 billion - by accelerating demand and complexity."
The problems are being compounded by the consumerisation of IT, with demand for digital technologies outstripping the ability of bank CIOs to provide effective IT and operational support.
One of the most striking examples is the pervasive use of consumer-owned devices for business purposes, forcing enterprises worldwide to introduce bring your own device (BYOD) policies.
The surge in IT demand, however, does not stop with BYOD, points out Gartner. IT is now expected to support cloud-based applications, employee use of social media, connectivity with external business partners, and many other new demand-driven IT use cases, many of which are effectively beyond the control of the enterprise's IT and operations organisations.
Similar issues are emerging at departmental level, as individual business units now routinely make their own purchasing decisions about infrastructure, systems and applications.
Gartner managing VP Peter Redshaw says it is up to bank CIOs and COOs to inform board-level perceptions of IT uptake and place greater emphasis on improving governance models, shared services and centers of excellence across product areas, using lower-cost locations, and outsourcing appropriate functions
They should also evaluate the IT management models used by pure play digital mega-firms, he says.
"In industries other than financial services, IT is no longer in the "back office," and this provides opportunities to learn from others," says Redshaw. "Enterprises such as Google, Facebook and Amazon provide valuable role models and a source of ongoing best practices for banks to learn from. Moreover, the Internet is making collaboration easier, so best practices can be shared and disseminated more rapidly."