International Business Machines Corp (IBM, +0.86%) is in an unusual fix in telling big U.S. banks they can use its Watson software of Jeopardy-winning fame to save money: bankers say they like it, but cannot afford it.
IBM is in good company. Banks are in the fifth year of their belt-tightening campaigns that began in 2011, chasing billions of dollars' worth of savings, and vendors that offer everything from technology to janitorial services are getting squeezed.
With persistently low interest rates hurting revenue and businesses like bond trading hemmed in by new regulations, few on Wall Street expect the austerity to end any time soon.
For IBM, the irony lies in the fact that senior bank executives say they believe its artificial intelligence software could help them achieve cost-cutting goals in coming years, but are not ready to pay for Watson today.
Several technology executives from large banks told Reuters that while the software may have enormous potential, they would struggle to convince top managers, laser-focused on quarterly results, to sign off on investments that do not offer an immediate payoff.
"It requires a lot of trust that you'll get the right outcome in a few years," said a technology executive at a large Wall Street bank.
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