Don’t be Southwest Airlines.
Investing in technology now – even as experts debate when, not if, a recession will arrive – might seem counterintuitive. But as Southwest’s scheduling system crisis over the holidays showed banking and all other industries, technology shortcomings create enormous costs in the short-term and in the future.
The company has estimated that the impact of its system meltdown during bad weather will cost it as much as $825 million. Customers mocked and disparaged the airline, resulting in millions of lost ticket sales. Executives took a pay cut.
To its credit, Southwest was investing in customer-facing technology. But when a storm hit, limitations on the back end due to its insufficient operations technology hampered Southwest’s ability to handle the most basic customer service in that industry: getting customers safely where they needed to be.
Experts have highlighted numerous lessons from Southwest’s experience, many of which can benefit bank and credit union executives, regardless of their institution size, as they manage competing priorities for spending and growth initiatives on banking solutions.
Community banks and the entire banking industry face downside risks from inflation, rising market interest rates, and continued geopolitical uncertainty, the FDIC said recently in its quarterly report.
And with the possibility of a recession, executives at community financial institutions may be inclined to delay or cut spending on technology for their banks or credit unions. But experts say that would be a mistake.