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Bank Systems & Technology: The Blog« May 2006 | Main | July 2006 » The bank tech vendor landscape - more or lessJune 30, 2006 @ 02:51 PM | By Art Gillis By Art Gillis The brevity of this message is backed by about 450 pages of details about what’s going on in the world of bank technology. Here’s just one glimpse. This year, there are 84 companies in the report. That’s 17% fewer than last year, and the reason is a common one - mergers and acquisitions. Some of the M&A activity happens faster than the time it takes for an invesment banker to lace up his wing tips. Cyota was acquired by RSA Security this year and EMC just acquired RSA. A handful of failures (all Internet-related) accounted for a small part of the decline also. But the number of solutions increased by 11% to 246. Most of the new solutions were in the payments arena and the compliance and security business. Comment on this blog entryIt’s true, outsourcing is gaining as a way to do core apps processing June 26, 2006 @ 01:55 PM | By Art Gillis By Art Gillis The numbers are in, and even though in-house is still a preferred method for community banks, outsourcing has gained in popularity. In 2005, new buy decisions among banks, thrifts and credit unions were as follows: In-house 56% In the years before 2005, outsourcing ran at about 23%. The reasons most bankers give for this turnaround is attributed to the increased complexity of maintaining a fully compliant and secure system. Another reason is the expansion and power of present-day systems. The most popular gripe about technology - It takes too long for vendors to deliver new stuff June 20, 2006 @ 09:46 AM | By Art Gillis By Art Gillis That’s what bankers are saying, and I can’t blame them because the world is turning into a real-time environment. Everyone is living in an instant time cycle. If you think there’s a solution to a problem, you want to see it right away. But I see something else. There are two parts to how long something takes. It’s the second category that gets all the gripes. For example, when has Microsoft delivered a new product on the original scheduled date? When has a major (or your own kitchen renovation) construction project been completed on the promised date? When has a war ended before people started to squawk? When did the Wright Amendment Repeal allow you to fly non-stop on a Southwest Airlines flight to San Francisco? Some things just take forever. And the culprit is people. What technology does in nanoseconds, people have to conform to Gantt charts that are plotted in years or even decades. So relax. Back in the seventies, we knew it was unwise to burn a lot of gas. So we took to SUV’s in the nineties to burn more gas. Now we want gas for a buck a gallon and 50 miles to the gallon. It’s a long way off. The answer is: Use wisely what you already have. Comment on this blog entry Ticonderoga #3, Eberhard Faber eraser, columnar ruled pads, hand-held calculator - Tools I can do without June 12, 2006 @ 10:06 AM | By Art Gillis By Art Gillis One of the first banking applications to find its way onto a PC in the mid-seventies was Asset/Liability Management. And it was a perfect marriage because ALM was about modeling. “Try this and see what you get.” In the days of manual grunt work, “try this” meant only one, two or three what-ifs because it required a lot of tedious work, and bankers were too busy pushing paper from one station to another. When I asked bankers what they liked about the PC-based solutions, they all answered - “power.” They could do hundreds of what-ifs by changing a variable, then pressing the execute key and examining the results to select the best option. Some of them enjoyed the gaming aspect of this new tool. They could roll the dice without risking the bank. And for once, they could tell an “employee” to do something and get instant completion without a gripe or a lot of attitude. Out of hundreds of what-if solutions, a banker could opt for the best one even if it just had the benefit of a few basis points. In a large bank, a few basis points means millions. In the world of core solutions, bankers can choose from 76 vendor-supplied possibilities. But they can’t afford to examine all 76, and that’s not a problem. Getting to 12 sensible choices is relatively easy. Getting to one best fit is very difficult unless an evaluator uses 36 tools. My 36 tools are computer-based, but they need a facilitator wearing an expensive suit, aka consultant. The 36 tools always find the most-right solution, even if the second choice is 95% right. Just ask the banks that used them. Those banks are still using the system recommended by the tools, and the comfort of never having to do another conversion. I believe that signifies happiness. A nice byproduct of the process is the consultant is not worn out and still going strong, thanks to the elimination of pencils, erasers, ruled pads and calculators. Comment on this blog entryA message for boutique-style banking: Get ready for atrophy. June 05, 2006 @ 12:32 PM | By Art Gillis By Art Gillis Do you think you’re going to influence a business customer or consumer to do their banking your way? Even in the remotest small communities, people read a lot and they want to believe they can get what the money center banks offer their customers. Any bank that wants to compete today will need all 14 delivery channels, every account type, any product and service offering, every payment mode, and be willing to adopt whatever is coming next. I haven’t heard the term “boutique bank” for several years, but I have heard “Internet-only bank” in recent years. Neither type survived. This is the Wal-Mart era of banking and Wal-Mart is coming to banking. Specialization doesn’t cut it with bank customers because even though the world may be flat, it is also complex, multifaceted, networked and works in real time. That concept was evident as I viewed bank technology from the side of a very strong provider of technology. As part of an annual program I call “Makin’ the Rounds,” I walked into a presentation room at Metavante where 13 solutions experts were ready to show me the latest version of this long-established company. When I say there were only two people in the crowd that I didn’t recognize, it’s not an attempt to demonstrate my popularity. Instead it shows how the bank tech business is changing to include shifts in consumer and business habits. One new person covered the expanding arena of payments systems and the other new person handled the broad area of business strategy, product management and lending competencies - topics that are very crisp in my mind as ways banks can enhance their capabilities and make more money. And please remember, banks are not altruistic organizations. The first thing on every bank CEOs mind every morning is how next quarter’s earnings report will look. Having started as what we all commonly referred to as a “service bureau,” Metavante has in the past three years put together the “engine” to drive any bank toward a completeness in being able to handle the “any” of financial processing. Banks are financial super markets, and one needs only to take a look at the supply chain that serves as the source of that completeness to realize it’s here and deliverable today. The next time a bank tech salesperson calls on your bank, you should begin by telling him/her to show you ALL the company’s offerings. |
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