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Bank Systems & Technology: The Blog« December 2005 | Main | February 2006 » Just what this industry needs, another banking conventionJanuary 31, 2006 @ 05:31 PM | By Art Gillis by Art Gillis I haven’t been to a banking convention in so many years that the homeless guys, on my way to the office, are complaining. "I need more T shirts." "Any more hats, the sun’s burnin’ me up?" It looks like I’m going to have to go shopping to clothe my "friends" but where am I going to find tight polyester T-shirts and stupid hats? Orlando and Las Vegas are the obvious answers, and right after a banking convention. Except as a reason for low-level bank employees to get out of town, I can’t imagine why any respectable professional would find him/herself in an arena where speakers pontificate their wisdom that works well only at a podium, vendors exaggerate their greatness knowing it’s not on a contract, and bank employees lie through their teeth about their procurement plans. At the end of three days, everyone goes back to work, and all is forgotten. Until next year. Knowledge transfer doesn’t have to be painful or expensive. January 31, 2006 @ 04:50 PM | By Art Gillis by Art Gillis Tomorrow, Fidelity National Information Services and Certegy will meet at the altar of mergers. So was it a coincidence that two officials from FNIS came to visit me today? Yes, and it was worth it. For this outspoken straight shooter, it was a display of “I tell it as I see it.” I wasn’t quite sure that these two companies were going to blossom all of a sudden just because they became one. My reasons were simple. Bankers just don’t abandon their incumbent vendors overnight in order to achieve some mild benefits like dealing with one company. After a very nice two-hour lunch, it was clear to me that something else is working here. Things that benefit the bank customer and productivity improvements for the banks. And when I further pressed on how fast the revenue line would notice this marriage, I got the only answer that really counts. “We’ve signed up a lot of banks already.” So from this not-so-humble consultant, I offer the following. Listen to your vendor. You might learn something as I did. And you might not have to get on an airplane to find out. And you might not have to give up a whole day, if you keep the small talk to a minimum. Comment on this blog entryFriday feature on HSAs... January 30, 2006 @ 04:01 PM | By Ivan Schneider "Bank of America, J. P. Morgan Chase, Fidelity Investments and hundreds of others are hoping to capitalize on the latest wrinkle in medical care paid by consumers: health savings accounts ..." HSAs are slated to be one of the key themes in the State of the Union speech. Gee, I wonder if it will become a partisan issue. Sad Sunday story... January 30, 2006 @ 03:53 PM | By Ivan Schneider "On the afternoon my mother died, she left work early. Her day as a computer programmer at Chase Manhattan Bank had skidded to an abrupt stop courtesy of a systemwide computer failure, and all employees got the afternoon off." Two Decembers: Loss and Redemption New York Times (registration required) January 29, 2006 Comment on this blog entry Taking A Stand...On What? January 26, 2006 @ 03:59 PM | By Ivan Schneider True, some bankers are willing to take a stand on social issues such as the potential abuse of eminent domain. But there's a real leadership gap when it comes to looking at the big picture — social and environmental sustainability in lending. Watchdog group BANKTrack rated 39 banks on the basis of 13 categories: human rights; labour rights; indigenous people; climate and energy; dams; biodiversity; forests; fisheries; extractive industries; sustainable agriculture; chemicals; transparency and reporting by the clients; and environmental and social management systems. The results: The highest overall average score, achieved by ABN AMRO and HSBC Group, was a 1.31, which if translated to a letter grade is a D+. Robert Napier, WWF-UK Chief Executive, said: “This report shows that whilst there has been some good work done by a few of the banks to develop policies the whole sector still has a long way to go. The lack of transparent policies can not only result in over-exploitation of environmental goods such as fisheries and forests but also in increased financial risk to the banks, resulting in transactions being jeopardised.” Search engine Google makes concessions to the Chinese government, and it makes the front pages of every business newspaper. But banks? A different (and lower) standard seems to apply. BANKTrack press release BS&T Classic January 26, 2006 @ 01:16 PM | By Ivan Schneider From the McKinsey Quarterly, a "Web exclusive, January 2006" titled: The main ideas: The footnote: This article was adapted from the original version, published in McKinsey on IT, Number 2, Spring 2004. If the fabled McKinsey & Co. can repurpose content from Spring '04, then so can Bank Systems & Technology! Here's the cover story and related features on outsourcing from the two-year-old-but-still-relevant March '04 issue: Pump Up The Volume ICICI Bank achieves exponential growth at fractional cost. I hope you find something of value for you in our "BS&T Classic" collection. Enjoy!
BB&T Takes Stand on Eminent Domain January 25, 2006 @ 01:17 PM | By Ivan Schneider Taking a stand on last year's controversial Supreme Court ruling, Winston-Salem, N.C.-based BB&T won't lend to developers building on land taken from private citizens through the power of eminent domain. “The idea that a citizen’s property can be taken by the government solely for private use is extremely misguided, in fact it’s just plain wrong,” said BB&T Chairman and Chief Executive Officer John Allison. Read the AP article. (via NYTimes) Read the release. Arizona Dreamin' January 25, 2006 @ 10:28 AM | By Ivan Schneider According to the FTC: The major metropolitan areas with the highest per capita rates of reported identity theft were Phoenix/Mesa/Scottsdale, AZ; Las Vegas/Paradise, NV; and Riverside/San Bernardino/Ontario, CA. The mythical conception of the American West is a place where you go to reinvent yourself, to craft a new identity. I guess some people are taking that literally.
BS&T: The Movie January 24, 2006 @ 06:27 PM | By Ivan Schneider I've always wondered why the lawyers get all of the attention in Hollywood, when banking is obviously the more exciting industry. Finally, Hollywood has recognized what we've known all along, with the upcoming release of a new film for the Bank Systems & Technology set, a film with the Harrison Ford seal of approval. From the "Firewall" Web site:
Plausible? A matter of concern? How would you or your organization respond in this situation? Do you know how to handle a gun? Explosives? Fast cars? At the very least, do you think you could defeat your attorney in hand-to-hand combat? The moviegoing public wants to know. Comment on this blog entryBanks not only ones who don't trust Wal-Mart January 20, 2006 @ 02:50 PM | By Maria Bruno-Britz Reuters says that the FDIC intends to do a bit more investigating before hearing Wal-Mart's bid to open a bank, at the behest of a bipartisan group of pols. Comment on this blog entryA Futurist’s Look at Technology January 18, 2006 @ 12:29 PM | By Art Gillis Twice a month I attend meetings at the Institute of Management Consultants, where I’ve been a member since 1979. Why do I go there? A quick answer is, exposure to knowledge and observing the world as something other than banking. Last night’s meeting was not only thought-provoking, it was mind-changing. I didn’t have to take notes because the points were captured in real-time and burned in to the cerebral database. David Smith was the presenter. With a name like that one has to look carefully to find him on Google. He’s not the David Smith who imports Indonesian furniture, or the sculptor, or the editor of the London Times. This David Smith is Vice President of Technology Futures, Inc., based in Austin, TX. 1. It started with a definition of technology I had never heard before. Technology is not a thing. Technology is knowledge to reach an objective. 2. Physics is over. We’re entering a world where previous laws won’t dictate solutions. Physical capacities will become obsolete. Gee, how I so loved saying, “For every action, there’s an equal and opposite reaction.” 3. The complexity of activities coming at us will mean we need automated agents to handle things for us. It’s like a Jeeves telling us there’s no way you can handle today’s Internet workload so I prioritized everything for you and trashed the 289 meaningless spam messages. 4. Maybe the human will become obsolete. Things will deal with things. 5. When Mr. Smith was asked if the real villain that caused the decent of U.S. excellence was the Government, he quickly said “No.” The CEOs of the top 100 corporations are, as are the mandates of Wall Street. Mind you, half of the Fortune 100s are Mr. Smith’s clients. Now there’s a guy you have to admire. He’ll bite the hand that feeds him when he believes something is true. 6. And has this Mr. Smith been to Washington? You betcha, and not at the staid old agencies like the Department of Labor, but at the CIA, Homeland Security, National Institutes of Health and DOD. 7. What about universities as the breeding grounds for new solutions? Universities are too busy managing budgets and protecting their turf. Collaboration is dead. Universities don’t want to collaborate with other universities. It’s like the old saying, would Macy’s tell Gimbels? One would think that universities are going to go the IPO route. There’s Wall Street again. 8. If it’s not real-time, it’s not useful. Everything is going to be real-time. Life is moving too fast to have to wait for an answer. Consumers will be tracked at the mall from one store to another and their purchases will tell volumes about their habits. Telemarketers will be calling your cell phone as you enter a competitor’s store, telling you it’s cheaper at their store, four down and to the left, and pass the ice cream vendor. You’re too fat already. Sorry, but these last remarks are my own, not Mr. Smith’s. 9. Does that sound like privacy invasion? Mr. Smith says privacy was first violated with the paper check. There is no privacy. But there is a difference between privacy and security. There are some security measures that will work in the future. For example, if an intrusion is detected, the data on a smart card can be erased in less than one nanosecond rendering it invalid to the perpetrator. 10. And speaking of real-time, forget alpha test or beta test. In pursuit of the marketshare goal, companies will be releasing new products so fast, they won’t worry about, “Do they work?” And forget about market research before product development. If you have an idea, build it. There’s no time to find out if people will buy it. That reminded me of some of the dot-coms and why they failed. Do I want someone else squeezing my lettuce? 11. If your car is less than ten years old, the computer in it is more powerful than a Cray Research Supercomputer. If you never heard of Cray, then your coming out party occurred in 1988. 12. Try to name an appliance that sells for $75 or more that doesn’t have a computer chip in it. Someone said vacuum cleaner. Mr. Smith recited so many things the chip controls in vacuum cleaners, that I decided to use ours as a backup if I lose my laptop. 13. Newly developed deterrents will prevent Internet intrusions and viruses for 19 hours. (another Smith snippet). After that, some kid will figure out how to overcome the new deterrent and break in. 14. Little snippets of data work wonders on audiences. Here are a couple. In the manufacturing and assembly process of building an airplane, Boeing does less than 8% of it. 92% is outsourced. China produces more PhDs in engineering and science than any other country. India is second. It made me think of other possibilities. Should the U.S. airline industry outsource to Boeing? If they don’t want to build them, maybe they should fly them. Should MIT outsource to IIT (India Institute of Technology)? Should the Pentagon outsource to Vietnam? Vietnam is better at fighting useless wars than we are. Should FEMA outsource to Florida? Florida had five or six hurricanes in one year and yet that state seems to work. You’re doin’ a heck of a job, Jebbie. The possibilities are endless. Maybe the Congress should be outsourced to the Parliament. After observing the clowns who were judging Judge Alito, that might just be a huge improvement. If we outsource all the tough jobs, then maybe we can sit back and enjoy the two industries we’re really good at - sports and entertainment. Wasn’t that a beautiful dress Charlize Theron was wearing at the Golden Globes? It was outsourced to rue Saint Roche, and in my opinion, that’s OK. The last time the west side of NYC took a stab at haute couture was for Eleanor Roosevelt’s appearance at the Democratic Convention in Chicago. Her speech was great, but NYC deserved to lose the fashion industry. When the meeting ended, I noticed there was still a lot of wine left. Too bad we were all sober. And no one was handing out Prozaks. Maybe I can catch part of the game when I get home. Comment on this blog entryWhat does Judge Alito know about technology? January 17, 2006 @ 10:00 AM | By Art Gillis A journalist covering legal issues asked me why Judge Alito hadn’t demonstrated any expertise regarding technology during his confirmation hearings. Following is my answer. I have worked on 22 cases as an expert witness because of my background in technology. I know nothing about the law. A good expert witness doesn't select his cases. They come to him so I have no bias as to why I worked on these 22 cases. The conclusion I have drawn from my experience is that cases relating to technology usually fall into one category - Who screwed whom. As an appeals court justice, it seems to me that Judge Alito would have been faced with more global issues than just Screwer v. Screwee, and that's why he wouldn't have much experience in technology issues. But what do I know about the law except that Professor Everberg awarded me an A in Commercial Law in 1957 at Boston University. In doing so, his integrity forced him to tell me that I wasn't always right, but he was impressed with my analysis and logic as I argued cases during exams. A sweet man he was because I looked at what was fair, not what was legal. The Largest Gap in Technology January 16, 2006 @ 09:59 AM | By Art Gillis The Largest Gap in Technology - The Executive Suite and The Bank’s “Factories.” To residents of the executive suite, Take a couple of days off, wear your jeans and a black turtle neck (a la Steve Jobs, the Apple Computer genius) and report for work in a few of your branch lobbies and your back rooms. Result: You’ll get depressed, and then you’ll kick a few butts. How do I know? When banks hire me to do it, my canary yellow legal pad ends up with about 200 systems-related gripes from the workers. A second piece of evidence is even more meaningful because it comes from a highly respected banker. Charles Prince recently found out that Citibank can’t tie together retail customers with four accounts. At least, that’s what the American Banker reported in a story on August 26, 2005. Hello! It’s 2006, does your bank use currently available technology? The problem is simply this. Executives don’t talk to workers. The working class knows about the deficiencies in present systems, but the resolving class doesn’t, or doesn’t want to know. And no one wants to be a whistle-blower. So the workers use their special skills to by-pass the problems even though their productivity sinks. At the executive suite, everything looks rosy because the work got done. When I show up at a bank and make my presentation describing deficiencies, it’s anything but rosy. And even though a few hot shots in the room will challenge my findings, I manage to win, thanks to the support of the workers I speak for who are sitting in that knowledge-based part of the back of the board room. The executive suite is a nice place to work, especially when the residents know the lobbies and back rooms are working at peak performance. Art Gillis ART GILLIS: The Best Way To Select A New Core System January 13, 2006 @ 10:18 AM | By Art Gillis The first step - Know thyself I don’t wear overalls, and we don’t have any more dirty kids playing in the mud. So when it’s time to buy a new washing machine, we start at the low end of the models - plain, simple and cheap. When we leave the store, thanks to a slick salesman, we are the owners of the top of the line in programmable laundra-ware. In the world of banking, that’s like a $200 million community bank buying the Hogan deposit system. It never happened that way, but I like the exaggeration to prove a point. Don’t ever select the “best system” for your bank. Select the “best fit.” There are 76 brand-name core solutions in the banking industry, and there are 17,700 financial institutions in the U.S. Are all the FIs using the right system? With gut confidence, I will argue the answer is NO. And I believe that because every bank didn’t use a science-like approach in the selection process. That’s a euphemism for they didn’t hire me to do the dirty work. The most popular approach in software selection, as performed by bankers, has to do with sheep. As the head sheep goes, so goes the herd. From an imaginary satellite, many miles up, a scanner might search all 17,700 FIs and report back that the two most popular core systems are Fiserv’s ITI Premier and Jack Henry & Associates, Inc.’s CIF 20/20. That happened because of another animal phenomenon. The horse on the inside track usually wins the race. Both Don Dillon (now Chairman of Fiserv) and Jack Henry (the man) saw the future with very clear vision and in 1976 created integrated banking systems for community banks. Today, many observers sitting on the 50-yard line ask me, “Why don’t you just announce to the banking industry what you think the best system is, and be done with it?” My answer is this. On my last 13 assignments, I recommended 9 different solutions (only one got recommended twice) because I paid attention to the 36 tests in selecting the right fit. On three of those jobs I said, “Don’t make a move.” The right system has more to do with the culture of the bank than the power of the vendor’s technology. For what it’s worth, to my 300 clients that did it right, it means they never suffered another conversion. And it started with the admission that they were not out to beat Citibank, Bank of America or Chase. They knew who they were. ART GILLIS: Show Me What's Comin' In Bank Technology January 13, 2006 @ 10:16 AM | By Art Gillis It's not about good news or bad news for 2006. It's all about different news. And what a welcomed change that will be! For this analyst, forecasting a predictable industry had become too easy, very boring, and usually contrary to what the trade journals, fed by "in-depth research reports," were reporting. Here's one example of the contrary part. CRM is supposed to be the top-priority tech project (American Banker 11/9/05). That sounds like the first resolution on every New Years list, "Lose 15 pounds." Good idea, but it ain't gonna happen. Here's another one. Large banks (125 of them) will replace their legacy core systems because they're over forty years old. Uhuh. And the strategy for the war in Iraq was "Shock and Awe." We are in shock and the World is in awe over one man's power to influence so many. What I believe is a pretty good list of things to come is based on my work in the trenches. But I should warn you, it gets muddy there, and my vision is not always sharp. continued...Comment on this blog entry
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