First, here are some general rules:
1. Good systems (in-house or outsourced) have been available for the past 30 years. If you chose one of them, you probably don’t need to switch now.
2. Good vendors have kept their systems up to date, so even if the system is 30 years old, it most likely is working as if it were a 2006 system. No system works like a 2007 system, but the good ones will when we get there.
3. Culture of the current vendor is extremely important. If you chose the right system but your vendor has been acquired three or four times and now is interested in maximizing earnings, you may
be ready for a switch.
4. The best system is only as good as its vendor. If one or the other goes sour, start shopping.
5. Listen to your fingers-on employees. They are the only ones who know how your system is performing. And they are very honest, as long as you don’t intimidate them. Pay attention to phrases such as, “It sucks,” “I can do it faster manually,” “It’s too complicated,” “I’m constantly logging in and out to complete an episode,” “I have to call 1-800 twice a day,” “The user manual and the system are about five years apart,” “We still can’t put together a complete customer relationship,” “The guy who designed the loan system must have come from a deposit background. Everything is backwards,” “The interfaces are like strangers who don’t understand each other.”
6. Brand name is helpful in determining performance - sometimes. But some banks can destroy even the best system. In those cases “conversion” means fire everyone and start over, but this time upgrade your pay scale.
7. Don’t fall for the vendor expression, “Easy to use.” If it’s too easy to use, it’s not comprehensive and sophisticated. The best systems require the best employees, and lots of them. And remember, what’s easy for a guy who built the system may be enormously difficult for a high school graduate who uses the system.
8. If your last formal training session was your first formal training session, don’t blame the system or the vendor. Spend the money and train your people.
9. Don’t pay attention to what other bankers are doing. After I conducted a seminar for the BAI several years ago, I was approached by two CEOs, one from SC, the other from NC. They were obviously buddies. They asked, “How much will you charge us if we both hire you?” I got sucked in and gave them a discount thinking one job would work for both. Their closeness didn’t mean a thing when it came to making the choices. My 36 tools pointed one to ITI and the other to Jack Henry. Over the years, they became very successful, while sharing a great friendship but making independent choices.
10. Most important is to stay ahead of your vendor. When he sends you a letter with the word “sunset” in it, then you took too long to decide if you needed to switch.
Take a break. I’ll have more to say on this subject in my next blog.
The following list came from my regular reading of eight trade journals back in 1999. These were considered fresh and hot things on the bank tech menu. In order to give some flavor to the list, I spiced it up with one man’s opinion of how each technology evolved in seven years.
1. Migrating to client/server technology -- Everyone didn’t do it and it wasn’t the revolution most people expected.
2. Database marketing -- Lots of noise, little implementation, mostly because bankers wanted to know “Which function key do I hit to do some marketing?” It’s a lot harder than that.
3. The Internet as a medium for banking -- Not overnight, but growing at the bankers’ pace, which, like ATMs, took 12 years to mature.
4. Image technology (checks and docs) -- A home run with one man on base (faster Check 21 implementation would have made it a grand slam).
5. Profitability systems -- Like a good diet and exercise regimen. Everyone talks about it, but few
do it. Vendor offerings are probably the best at it. It’s bankers who are the problem.
6. The future of branches -- Some said it was dead, and the herd listened, but the opposite happened. Banking is still a people business even though the Internet was supposed to make banking people-less.
7. The implementation and management of LANs and WANs -- Implementation occurred for good reason, but management of them became an added burden.
8. Home banking -- It’s not called that anymore because it’s now called In-your-car banking or office banking or waiting-in-line banking, anywhere else but home where we just want to have fun.
9. Reengineering the bank -- A good title for a book, but platform automation vendors and imaging vendors did more to change workflow than any industrial engineer. If tech vendors didn’t exist, I’d love to own a feather-plucking franchise to produce quill pens for 17,823 banks.
10. Video conferencing kiosks -- A dud.
11. Converting to Asynchronous Transfer Mode network technology -- Any improvement in network technology will be a good thing for systems users.
12. Object technology -- Did anyone notice? Most bankers were buying “subject” technology.
13. Shifting routine human teller transactions to ATMs -- Let’s face it, the ATM is still a cash machine and that’s OK.
14. Increased automation support in the lending functions -- Some vendors did more than others,
and in my opinion, there can’t be too much additional work in this area.
15. Customer retention through comprehensive database activity -- A myth. Saying “Have a nice day” is just as effective.
16. Electronic Data Interchange and eCommerce -- Slow to develop enough steam to undo old systems because these are not plug-in technologies. The environment has to change first.
17. Integration of customer databases -- When reporters stop using the word “silos,” then you’ll know it happened. Or maybe I have a personal bias. The bank that has my 13 accounts still doesn’t recognize my largest account. Duh!
18. Electronic check presentment -- A great idea, but wimpy volumes. Even in the fifties, computers were screaming, “Give me your volumes, your tedious work, your brainless processing.”
19. Smart cards -- Dumb ideas. When a piece of plastic does a great job, (debit/credit) take it to the next level of uselessness.
20. Increasing technology’s ability to displace people-based activities -- Where do I start? The high volume people-reducer technologies have already done their job. Now new technologies will replace a small number of clerical people, but the technologies will need expensive support people to keep them working.
The fantasy equation: 2 hi-tech people minus 6 clerical people = 0 savings.
21. Data warehousing -- A good technology that is used only by banks who have smart people.
22. Call centers -- It worked so well in the underemployed communities of the U.S. that it is now offshored to Tom Friedman’s flat world.
There are 30 stories in the 2006 Edition of Automation in Banking, in addition to 473 pages of stats and facts. Sixteen stories are from the mouths of bankers. Fourteen are from the keystrokes of prominent tech vendors. I served as the humble messenger.
The primary value of the stories, in my opinion, lies in the fact that the subjects were their choices.
Here are the topics they chose:
Bankers:
Core Systems as an in-house mode of processing 38%
Core Systems an an outsource mode of processing 13%
Internet banking 13%
Wire transfer 6%
Platform automation 6%
Overdraft protection 6%
Remote branch capture 6%
Integrating platform systems with core 6%
Fraud detection 6%
Tech Vendors:
Integration
Risk Management
Straight-Through Commercial Lending Workflow
Check 21 and Remote Deposit Capture
Straight-Through Processing
Extended Financial Enterprise
Shifting the Focus from the System to the Customer
Attract and Retain Deposits
Capitalizing on Electronic Payments
Investing in Your Future Technology
Disaster Recovery
Shopping for a Core Banking System
Straight-Trough Processing - Front and Back Offices pulling Together for the Customer
The Next Level of CRM
Are these the right topics? Who’s to say. They ARE the topics.
