Mortgage Crisis and Technology's Proper Role
Greed played an immense part in the mortgage debacle, but so too did technololgy, or rather lack of technology.
Many of the failed financial institutions skimped on their technology budget, working with out-grown software and an information architecture that were unable to paint a clear picture of the risks in hoarding up subprime loans and bundled mortgage securities. Instead of building an IT model that integrated various departments and business units, little ivory towers were erected within organisations resulting in fractured, complex data that was difficult to analyse. Crooked executives, as in the case of AIG, exploited the disarray, keeping auditors content with figures that were far from the truth.
One of the major banks still standing is a testament to how essential robust technology is. Goldman Sachs is well known within the IT community for investing in up-to-date technology, and employing an information architecture that unifies its business units. Its smart, progressive IT policy has helped keep the company upright, despite being rocked by the surrounding domino effect.
That's what good technology does. Its purpose is to support management as they work towards realising strategic goals. It offers detailed data analysis so the right decisions can be made. It is highly transparent, so no amount of doctoring hides poor choices and internal fraud. And for the banks that failed, it would have helped determine what risks were manageable, and what were simply over the top.
Source:
http://conversationstarter.hbsp.com/2008/01/how_technology_amplified_the_m.html
