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I read that in a company, if you are on the revenue side of the balance sheet, you will earn more than if you are on the expense side.

I realise that being in IT in Banking is the expense side as we do not generate revenue. My question is, are all roles, even senior ones in banking IT, considered to be expense side?

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This depends entirely on the kind of "IT" you're doing. A couple of examples to illuminate how wide the term is:

  • Computer support: expense
  • Online banking: basic functionality is expense, but ability to upsell users to high-end products is income
  • Automated stock trading: income -and it's extremely high in demand

To answer your core question: look beyond the title ("IT"), to the function you're providing to the bank, and ask if / how that function can generate money for the bank for better income possibilities; if the answer is "none", figure out which levers are closer to making money, and position yourself as such.

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  • Can you explain this one : Automated stock trading. Are you referring to a quant role developing trading systems? – Victor123 Jun 10 '11 at 10:47
  • Yes, but there are also many automated trading mechanisms in place to maximize earnings on eg. savings accounts. Given the amount of money involved, any incremental 0.01% improvement on these can yield obscenely high returns. – Silver Dragon Jun 10 '11 at 11:01
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I must point that without the IT - no-one in the bank generates any revenue. Not to mention the fraud prevention and informational security.

To the best of my knowledge - IT in banks and financial institutoins are paid very well for their services, and they earn every penny of it.

IT is not just online banking or computer support. IT is the whole underlying infrastructure of the modern banking. Investor without the proper links to the stock exchanges will go elsewhere, loans that cannot be evaluated fast enough (using of course the IT infrastructure) will be taken from someone else, CD's for which the interest is calculated manually will probably not be as attractive as the CD's managed by the computers at the bank next door, credit and debit transactions, ACH, direct deposit, etc - cannot be done without IT.

So IT is not expense, IT is infrastructure (and that is "operations" in the budget books). Every function of the bank that generates revenue - relies and depends on it.

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  • Albeit you are correct on every one of your points, OPs question was more about bank manager's mental model of different activities for income-maximizing. – Silver Dragon Jun 10 '11 at 8:59
  • @Silver Dragon : Yes...correct – Victor123 Jun 10 '11 at 10:48
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Here is how your CEO has to see it. Of course, eventually most revenues are generated by IT systems but technically IT still is an expense only activity unless of course you are selling the software/services offered by it.

According to the US GAAP, software development costs are capitalized when a firm develops a software for its own use (e.g., nice shiny UI show bank's VaR, algorithmic trading engines, internal security infrastructure etc.).

When the software is developed for sale, all the costs are expensed as incurred until the technical feasibility is established after which the costs are capitalized. The income is realized when licenses to use the software or the services provided by it are sold.

According to international standards, the treatment for both the use cases shown above is the same --all the costs are expensed as incurred until the technical feasibility is established after which the costs are capitalized. The income is realized when licenses to use the software or the services provided by it are sold.

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