Survey Sponsored by:

2006 Community Bank

Technology Survey Results
Part 1. Respondent Profile Asset Size in Millions
$1–10 1%
$11–20 3%
10% Northwest $21–30 6%
$31–50 12%
54% Midwest 9% Northeast
$51–75 13%
$76–100 11%
$101–200 24%
$201–400 17%
$401+ 10%
No Answer 3%

Number of Full-Time
Equivalent Employees
1–10 9%
11–20 19%
21–30 16%
31–40 10%
41–50 8%
51–75 12%
76–100 7%
19% Southeast 101–200 9%
8% Southwest 201+ 5%
No Answer 5%

Survey results can be found at:

www.icba.org • www.bkd.com • www.plantemoran.com
2006 Community Bank Technology Survey Results
Part 1. Respondent Profile (Continued)
Some results have been sorted by bank asset size to Banks to $100 Million Exceeding $100 Million
allow for more accurate comparisons. All Responses in Assets in Assets
1. Does your bank have a chief information officer (CIO), chief technical officer (CTO), or a staff member otherwise dedicated to technology full time?
Yes 43% 20% 63%
No 57% 80% 37%
2. What long-term technology decisions does your bank face?
Internet banking 28% 32% 25%
Imaging-related technologies 53% 53% 54%
Systems security 60% 54% 66%
WAN/LAN/Network concerns 30% 25% 35%
Keeping technology affordable 64% 66% 62%
Core processing issues 22% 19% 25%
Staying up-to-date on upgrades to existing technologies 55% 51% 58%
Internet access, e-mail, or connectivity concerns 25% 23% 27%
In-house vs. outsourced processing decisions 17% 17% 18%
Regulatory compliance solutions 44% 38% 49%
Call center solutions 09% 13% 15%
Data security 55% 52% 58%
Other 03% 12% 15%
3. What have you budgeted for technology spending in 2006?
Less than $50,000 41% 66% 18%
$50,000 – $100,000 26% 21% 31%
$100,000 – $250,000 17% 19% 25%
$250,000 – $500,000 08% 01% 15%
More than $500,000 05% – 09%
No answer 03% 12% 02%
4. How will your technology spending be focused?
Hardware 54% 52% 55%
Software 64% 60% 67%
Personnel 12% 12% 11%
No answer 2% 3% 2%
5. Is your 2006 technology budget more or less than the 2005 technology budget?
More 54% 51% 58%
Less 13% 17% 10%
Same 31% 31% 30%
No answer 12% 12% 2%
6. Do you foresee your 2007 technology budget to be more or less than your 2006 technology budget?
More 50% 49% 51%
Less 18% 20% 15%
Same 31% 30% 32%
No answer 1% 1% 2%

Banks to $100 Million Exceeding $100 Million

Part 2. Technology All Responses
in Assets in Assets

1. How is your bank’s core account processing performed?

In-house 53% 53% 53%
Outsourced 46% 46% 46%
No answer 1% 1% 1%
2. How is your bank’s check processing done?
In-house 63% 61% 64%
Outsourced 36% 38% 35%
No answer 1% 1% 1%
3. Which of the following vendors does your bank utilize for Core Processing? Which of the following vendors does your bank utilize for your
(Top five in alphabetical order) Imaging Solutions Vendor? (Top five in alphabetical order)
Fidelity Information Services (FIS) Computer Services, Inc. (CSI)
Fiserv/ITI Fidelity Information Services (FIS)
Hartland Financial Solutions Fiserv/ITI
Jack Henry Hartland Financial Solutions
Precision Jack Henry

Which of the following vendors does your bank utilize for Item Processing?
(Top five in alphabetical order)
Fidelity Information Services (FIS)
Fiserv/ITI
Hartland Financial Solutions
Jack Henry
NCR

4. Which of the following software applications is your bank currently using or planning to evaluate in the next 12 to 18 months?

Currently Planning to Of No No Currently Planning to Of No No

Imaging Technologies Using Evaluate Interest Answer Internet Technologies Using Evaluate Interest Answer

Automated signature verification 12% 23% 37% 28% E-mail customer service applications 19% 31% 27% 23%
Check imaging applications 72% 19% 2% 7% E-mail statement delivery 24% 47% 15% 14%
Document imaging applications 38% 45% 6% 11% Authentication Technologies
Imaged-check clearing networks 28% 52% 6% 14% Token/Devices 12% 37% 29% 22%
Power encoding (Using optical Smart cards 1% 23% 45% 31%
character recognition) 22% 23% 32% 23% Digital certicficates 21% 25% 29% 25%
Third-party image archive Location ID (IP address confirmation) 11% 34% 28% 27%
storage solutions 21% 18% 37% 24%
Secret image selections 4% 29% 38% 29%
Bar coding 10% 16% 47% 27%
Biometrics 8% 24% 41% 27%
Bank Operations Technologies
Challenge questions 18% 41% 19% 20%
Asset and liability modeling 51% 13% 17% 19%
Behavioral/Transaction analytics 6% 23% 40% 31%
Branch profitability 23% 21% 31% 25%
Other
Customer profitability 20% 34% 22% 24%
“Talking” ATMs 8% 6% 60% 26%
Customer relationship management (CRM) 14% 31% 29% 26%
Triple-DES encryption 71% 7% 9% 13%
Lockbox (remittance) technologies 11% 13% 48% 27%
Online training for staff—Compliance 59% 21% 7% 13%
Integrated (“online”) teller systems 43% 18% 20% 19%
Online training for staff—General skills 52% 23% 9% 16%
Product profitability 9% 30% 32% 29%
Report generator technologies 46% 13% 19% 22%

5. Is your bank’s technology ahead of or behind where you would like it to be?
Far Less On Better Far Ahead No
Behind Than Desired Target Than Expected and Advancing Answer
All Responses 1% 23% 57% 15% 3% 1%
Banks to $100 Million in Assets 2% 26% 53% 15% 3% <1%
Exceeding $100 Million in Assets 1% 21% 60% 15% 2% 2%

Part 3. Internet All Responses Banks to $100 Million

in Assets
Exceeding $100 Million
in Assets
1. On average, have the number of your online banking customers increased, decreased, or stayed the same in the last three years?
Increased 79% 68% 89%
Decreased <1% 1% –
Stayed the same 9% 10% 8%
No answer 12% 21% 3%
 5. Which of the following is your bank using
Part 3. Internet (continued) Part 4. Security to learn about computer or physical
vulnerabilities? Check all that apply.
2. Does your bank maintain an Internet 1. Do you have formal written policies to
banking site that allows your customers to Financial Services Information
follow for the following issues?
perform Internet banking transations? Sharing & Analysis Center (FS/ISAC) 22%
Network security 89%
Yes 83% Microsoft or other technology
Acceptable Internet use/security 91%
provider websites 63%
No 16% Technology planning 45%
No answer 1% Intrusion protection websites 35%
IT service provider selection and/or
contract maintenance 54% Security research websites
3. If you offer Internet banking through IT disaster recovery plan 94% (for example, CERT.org) 34%
your bank’s website, please share what IT business continuity plan 83% Federal government websites
functions can be performed: Data security 84% (for example, US-Cert.gov, infragaurd.net) 38%
Pay bills electronically 100% Data security breaches 71% No answer 18%
Update account information 66% No answer 1%
Apply for loans 27%
View check images 83% 2. Does your bank employ the following 6. Do you have wireless networks?
Apply for credit cards 11% technologies to defend against intrusions? Yes 12%
Open deposit accounts 8% Intrusion Detection Service (IDS) 64% No 88%
Aggregate financial information Intrusion Prevention Service (IPS) 48%
from other Internet sites 3%
No answer 25%
Online brokerage 3% 7. What is your bank doing about multifactor
Provide insurance quotes 1% authentication?
3. In the last 12 months, has your bank had Implementing the core banking
4. How much has branch traffic reduced due any of the following? vendor’s solution 66%
to Internet banking? An external systems/ Implementing another
Decreased 25% 55% Network security assessment 69% security feature 14%
Decreased 50% 1% Doing nothing 15%
An internal systems/
Decreased 75% <1% Network security assessment 58% No answer 5%
No answer 44% A phishing and/or spoofing attempt 25%

5. Who is your Internet banking software vendor? No answer 18%

(Top five in alphabetical order)
Certegy 4. Do you perform 24/7 network security
Digital Insight monitoring?
Fiserv/ITI Yes, monitored in-house 25%
FundsXpress Yes, outsourced to a security
Jack Henry monitoring company 47%
No 26%
6. How does your bank connect to the Internet? No answer 2%
Modem 2% Shared T1 9%
DSL 35% Full T1 35%
Cable 10% T3 2%
Satellite 2% Other 5%
The survey was sent to 8,470 community banks; the survey data
is based on responses from 12% of the banks.
7. Are you able to receive Internet e-mail?
Yes — Staff have individual e-mail addresses 59%
Yes — Some staff have e-mail addresses 35% Questions or comments regarding this survey can be directed to
Yes — Shared e-mail address for all staff 3% dewite.north@icba.org, greg.cole@bkd.com, or
No — Cannot receive Internet e-mail <1% donna.smith@plantemoran.com.
No answer 2%