Admirers of computerization rely primarily on anecdotal case studies as evidence of astounding productivity gains. But such stories rarely hold up as independently verifiable proof. Some academics have generated a small number of studies trying to show that spending on computers has been extremely profitable. Published financial statements from commercial banks offer perhaps the best data for tracking recent changes in productivity. Only banking firms publish detailed data about overhead costs, payrolls, employment and equipment purchases.
Banks are also unique in that their statistics reflect their total economic value added.
Because of tight regulatory controls, their reporting practices are more uniform than those in other industries. Such high spending rates should give computers every opportunity to demonstrate improved productivity results, since increased computerization would figure as a critical influence in operating results. And showing such a favorable impact of computerization on productivity may indicate that IT could be profitable for other industries. To find out if banking productivity has made recent gains, I collected financial statistics for 497 U.S. commercial banks. I excluded 36 that had drastically reduced employees through mergers, leaving 461 firms employing more than 1.2 million people.