By Art Gillis

In recent years, I’ve been saying that my insights about core processing come from two sources: 1) assignments I have completed for 300 banks. And 2) from the annual compilation of Automation in Banking. But last week a highly respected listener said, “Wow!” when he heard the 300 bank projects I had completed. I wasn’t sure if he meant skepticism or true admiration. In any event, it triggered my neurosis, so I counted the clients referenced in my 33-page c.v. and, uh oh, I came up with only 180 names.

What happened to the other 120? It’s called “industry consolidation.” But did my recommendations cause the banks to sell out? Or was it just a natural phenomenon of the industry. In the 30 plus years that I have been working for banks, the number of commercial banks shrank from 10,850 to 5,274, according to my buddy, David Soto (dsoto@highlinedata.com), the guru of bank stats. That’s a reduction rate of 49% . The reduction rate in my client base was 40%.

Then may I relax and say my clients are just representative of the industry norm? What I do know is that the 180 that still exist are using the same system I originally recommended even if it was 30 years ago. And this is why I begin the orientation meeting at each new client assignment with this remark - “We are going to select a new core system for your bank, and this will be the last conversion you will make even if you live to be a hundred.” Everyone cheers, and Excedrin sales drop in that city. As I see it, there are about 3,712 financial institutions that need to get over the denial phase and take a good look at their core system. Sooner or later, they are going to have to switch to something better. Last year, 755 bit the bullet and switched. At that rate, the entire population will be in good shape in five more years, except for the core vendors who will have to find other things to sell. That’s OK, most of them have dozens of other things to sell.

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