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Main / Art Gillis Weblog

First, I want to be clear about the word "outsourcing" because many writers today use the word to mean "offshore contracting." In this bank technology context, outsourcing has nothing to do with geography. I'm talking about the banking industry in the U.S. where outsourcing was known, 45 years ago, as "service bureau" or "third party processing" or even "correspondent banking." The outsourcing word was adopted as a modern word in 1989 as a result of the IBM/Kodak deal.

In 1983, I published a set of guidelines designed to protect data (aka electronic money) as gazillions of bytes traveled through copper and chips. Ah, those were the good old days. I was confident I had every threat pinned down to 39 rules. At the time, 39 was about 30 more than the ordinary CIO had identified, and what was worse was most CIOs weren't even worried about any breaches because they relied on one pervasive safety net called "It won't happen to us."

1. Hire a personal auditor, but not a partner of the bank's audit firm, and not one of the Big Four.
2. Hire a personal attorney, not from Philadelphia, but nearby from the Bronx.
3. Outsource all personal expense report submissions to an independent accounting firm that has no ties to the bank, and no ambitions to be there.
4. Hire a personal devil's advocate as an independent contractor with a guarantee tenure to make sure I uphold moral, business, ethical and fairness rules as the contractor may prescribe.
5. Hire an attorney who specializes in SEC matters to make sure all my Wall Street transactions are legal. ...

With all due respect, I realize that my bank clients and private equity clients care a lot about the performance of their investments in the stock market. I’m simply saying that as an advisor to banks that are searching for a new core applications software or service company, I deal with 814 criteria in making my final recommendation. The price performance of a vendor’s stock is not one of the 814.

Today, there are fewer bank tech companies, but more solutions in the marketplace.
In 2001, there were 165 companies selling 223 solutions to banks, thrifts and credit unions.
Today there are 71 companies selling 306 solutions. That's 57 percent fewer companies; 37 percent more solutions.

A few years ago, the stats were telling me that the #1 business (new core sales) for bank tech vendors was leveling off. Not dying, mind you, just leveling off from about 8 percent of the population to about 3 percent. The sale of core apps solutions is the sweetest sale any vendor can make for these reasons: It's the biggest thing every financial institution (16,881 in the U.S.) does. All FIs do it every day. It's so critical that FIs would be subjected to huge risk if just one night's processing didn't occur. And from a vendor's standpoint, that's where the money is. For example, each of the top three banks in the U.S. spends $5.25 billion a year on core processing. If Fiserv and Fidelity National had only one of the top three banks as their only customer, each company would earn more revenue than the thousands of banks that Fiserv and Fidelity work for now.

If you think that I'm not qualified to dish out advice about selling because I am only a technology consultant, think again. My very first business venture at age 10 went through a rude awakening that I was able to overcome for one simple reason: I learned how to sell.

First, I should tell you I have a relationship with two ladies at the Securities and Exchange Commission in Washington, DC. It started on May 21, 1999. I initiated the relationship by sending a general letter to the SEC about who I am, what I do, and a whole lotta claims of my innocence regarding what I know and don't know about a handful of public companies. I have six letters in the file from two ladies acknowledging my disclosures. They were not form letters. Each letter had a serial number. They told me how my letters would be distributed to interested parties within the SEC. You'll be happy to know this is your government at work—very efficient, very accountable and very responsive.

My bookcase contains 22 past editions of Automation in Banking. The 23rd is still in the oven. The 22 are dog-eared because I have had to refer to them many times to answer questions from very intelligent readers who had a need to know. Last week I read the 1985 Edition, and here are some highlights that got my attention:

It's numbers crunching season again for me, and my outlook has been confirmed as if a combined team of Big Four auditors ripped through my databases looking for errors, omissions and even fraudulent opinions.

Forgive me folks, but half of what I learned about human behavior came from the lyrics of pop and country music: Thus, the first part of the title of this blog.

I have always empathized with sales guys. They have the toughest job in our business because they are in the front lines, often alone, their audience is the enemy, and to make matters worse, they are constantly nagged by the win or lose outcome of their efforts--nothing in between. This story is about helping a rookie sales guy who left the confines of the brain trust territory to sell a technology in the land of "The Big Easy."

You can fill in the rest of that title statement as you see fit. The reason I am writing this analysis is because clear-thinking investment analysts believe that when banks are in trouble, they will cut back on tech spending, among other expenses. That's a logical position to take, at least on the surface, but there's more to this issue than a surface look, and I'd like to explain the details.

I don't know if Alan or Ben ever used some of my indicators to gauge the economy. Here are a few signals that I have observed which lead me to believe all is not well in the business world. If you're looking for deep-rooted intellectual thoughts here, then just know I can't deliver that caliber of economics. My stuff is in-your-face observations from the chores conducted by a small business owner. That means I'm not talking about my consulting practice.

It's been at least 15 years since I "enrolled" on the Internet, and I knew it would take a while for it to mature, where mature means getting rid of the scam artists. I was wrong. The Internet will never mature to my idea of a clean, wholesome resource. Today's interlopers must think we're all stupid, and we'll fall for their con games. So I took matters into my own hands, or fingers, and learned how to bypass the abuse. I offer some tips, although I'm sure you have your own.

Two years ago, I saw a list of opinions regarding his/her/their "own grandiose challenge to the industry." In my opinion, it was more like an in-your-dreams list, so I saved it to see if a couple of years would produce any kind of change close to the dream. The short answer is, it would take decades or fuggetaboutit. Here's the score card:

Three conditions affecting the banking business seem quite real and have already become visible in the form of poor earnings reports from the giants - losses in investment banking, the credit crunch and subprime mortgages. So it's natural to look to the left and right for other industries that might be affected. Of course, IT is a likely candidate for losses because as bank profitability goes, so goes IT investment. Maybe.

I have completed 154 consultations for 67 investment firms in the past two years. The analysts asked a lot of good questions (none that I didn't expect) about the performance of bank tech companies. However, no one ever asked me about the competence of the sales forces. Not one - nada, nyet, rien, niente, keine, tipote. So I feel the need to speak out about the overall condition of the bank tech vendor community, as I see it, including the good, bad, and ugly. Most of it is good, I'm happy to say.

With all due respect to the Cs in every bank tech company, show me a salesman who brings in the business, and I'll show you the person who is going to propel our industry into one very sweet higher level. I have met only 9 tech sales reps in 35 years who left a lasting impression on me, so don't expect a smashing 2008 unless the new breed of salesman is going to hit the streets soon.

In my view, 2007 was not a Boston-Sports-Teams year for the banktech business. There were some losers in our arena, as well as lots of worries; a large number of lower stock prices for banks and techs; a ninth inning attitude among bankers who achieved a good-enough system to get the job done, and then took a rest; certainly nothing new and exciting showed up to compete with the likes of Apple Computer. But one has to recognize the good things. For example, U.S. banking transactions got posted accurately and on time during 4,308,198 posting runs in 2007. Presumably 112 million households were pleased with the processing of their accounts. And I believe business customers got the same accuracy and timeliness. The press had far more compelling events to write about than to look for banking glitches. I was interviewed for only two failures in 2007 and both were ATM related, and both were corrected within 24 hours.

Domestic core system vendors vs. International core system vendors. Every week I read about a new sale made by either i-flex solutions, TEMENOS, Infosys, Misys, or Tata Consultancy, and they are mostly significant sales. But their marketplace is not the U.S. There's a more active market out there called "the rest of the world." While this robust new business activity is taking place, U.S. vendors are still looking for the passport office.

To all the guys in our business who have made the tough loans during good times and bad times, let me confess. I've never been there. I only watched, and here are some things I discovered about lending.

Computerworld just published its list of the top 100 innovators. I am not one to be impressed by "beauty contests" but I like to see how others rank the best performers.

It was on August 29, 2005 that I took my first cheap shot at the now fired CEO of Citi, after I had read a PR-type article in the American Banker. This was the shot: Mr. Prince says, with surprise, "Citibank can't put together four accounts of a retail customer." Even a rookie in today's bank tech world has to ask, is the year 1965? I believe the next operating committee meeting at Citibank might well begin with, "This is not about insurance, brokerage or other financial services. This is about banking. Is there a banker in this room who can lead the discussion?"

As if there isn't enough bad news about the economy, here I am adding to the heap before it even happens. As much as I don't like bad news, what's worse is bad news that comes as a surprise. So be prepared. Just follow the facts, and then draw your own conclusions.

Last week's blog about large bank vs. small bank technology produced exceptionally good and meaningful feedback.  I believe the three respondents added new dimensions to my message, and thus I want to make sure everyone sees the wisdom of the three gentlemen who commented.

Once again, I first must confess to a bias before making this case. "Big" by itself has never impressed me. "Big and capable" is another matter. So when I tell you that small banks have better technology than the giants, I'm ready to defend my statement with facts.

Short answer--not very. In the past week, the top four bank tech vendors made headlines--the kind that Wall Street notices. Metavante went public after thinking about it for several years. Fidelity National Information Services intends to split the company into two public companies. Fiserv sold off a major piece of its healthcare business. And Jack Henry announced a nice first quarter report. Forgive me, folks, if this stuff doesn't get to me like the Red Sox Sweep, and it's not that I don't care about 96 companies in my report.

There's a lot of bad news in the financial services sector these days, and I'm sure it's real — problems with subprime mortgages, problems with the investment banking units of large banks, poor quarterly earnings by some of the giant banks, downturn in the national economy, slump in the housing market, deterioration in credit quality, and not-so-encouraging comments by the Ben & Alan Duo saying things could get worse.

There's some VERY good news for bank tech vendors, and there's some PRETTY good news. But the BAD news is, most bank tech vendors don't see the hidden opportunities. First I'd like to explain what might appear as contradictions to anyone who has tracked my previous blogs.

I have never viewed more than ten seconds of a Dr. Phil episode, so I apologize in advance if I used the wrong metaphor. And since I'm in an apologetic mood, I should admit up front that I will step on lots of toes in the process of getting across a very important message: "Don't play politics with technology."

Fifteen to twenty years ago, it would have been quite ordinary to observe the large number of start-up companies based on a single-product offering under the broad heading of bank tech systems. Major events fed that creativity, including the availability of PCs, document imaging, Internet banking, check clearing legislation, telecom speeds and powerful database management systems. In recent years, however, the scene switched to a different kind of world - that of consolidation. Big companies got bigger, while small privately owned companies disappeared, at least in name.

I don't think so. And here are the reasons.

• Before 2007 even had a chance to show its strength I wrote a blog titled, This is a Pretty Dull Time for Bank Technology." I was hoping to generate some objections, disagreements, differences of opinion or even insults. I didn't get a whimper. Instead, I received a note from the Editor of Computerworld saying a reporter's story and my blog must have crossed in Cyberspace because the idea was the same. She called the industry "dull and boring."

My last blog "When David And Goliath Come To Terms, One Wonders What The Sub-Goliaths Were Doing" was about the absence of accuracy in reporting the true cost of IT. Here, I'll give my views, based on my work experience at 331 banks, as to why accuracy is more than just a good thing to do in compiling a P&L. An accurate IT cost is a major factor in taking initiatives to arrive at sound IT decisions.

As a consultant, I have worked for 4% of all small banks, 5% of all medium size banks and 14% of the 111 large banks in the U.S. My consulting practice includes 16 services. The second most popular one is an analysis of a bank's IT expense.

First, how about if I define the players:

David is ACI Worldwide at $348 million per year in revenue.

Goliath is IBM at $91 billion per year.

The sub-Goliaths are CheckFree at $973 million and Metavante at $1.5 billion.

It sometimes haunts me to think that I have been in the bank tech business longer (as long in the case of Metavante) than the top six core companies. Other times, it provides me with the hutzpah I need to offer this "what if" blog.

I'd like to begin this blog with story about a nice experience dating back to the sixties when I worked for a large consulting firm. Our client was an airline called TWA. The board of directors hired our firm to answer a question that management and the board couldn't resolve - Should TWA move its reservations center to Rockleigh, New Jersey or leave it in Kansas City?

First, let me describe the arena this blog is about:

• "Large banks" include 145 financial institutions (FIs) operating in the U.S. The good people at Highline Data came up with 145, but I reduced it to 122 because I look at corporate entities, not charters.
• The list includes asset sizes of $8 billion to $1.3 trillion.

I have said several times that the bank tech industry is experiencing a lull. There's nothing brand new to buy. And most vendors are noticing the lull in their revenue figures.

I'm putting this question to the readers of Bank Systems and Technology because based on feedback that I have seen, some of you have the answer, whereas I don't.

It worked for Hercule Poirot; it should work for "investigators" in the bank tech world. What we need now more than ever before are thinkers, disrupters, analysts, inventors, and new ways of doing things. The mechanical processes are pretty much operating at peak performance after more than 45 years of using improved technologies.

In 2006, the bank technology business was good for bankers and it was just OK for vendors.Bankers were getting the work done every day; they were reasonably safe from hackers, phishers, and T-shirt collar criminals; they were generally comfortable that their catch-up game was running neck and neck with market-available technologies; and they were free from big spending projects that in the past, seemed to be integral to anything with the word technology in it. I would imagine their Wednesday afternoon golf was never disrupted in 2006 because of an IT disaster. There were two reasons for this state of justified euphoria.

By Art Gillis
http://www.artgillis.com

After I wrote last week’s blog, I was haunted by that old cliché, "A picture is worth 1,000 words." In this case it's 382.

So folks, look at the picture.

download

By Art Gillis
http://www.artgillis.com

If someone paid me $7 million, plus or minus a million, to create a new bank core system for community banks, the first thing I would do is fly to Kansas City. That’s sort of a private matter, but my mission would be to assign all the bread and butter applications to a man I believe has four very rare skills:

By Art Gillis
www.artgillis.com

Every time I walk by the aisle in the book store where the books for dummies are stacked, I feel like I want to buy all of them. So please do not be offended when I use the term "dummy" in the context of technology. The reason for an Alpha Test is to assure the developers that the system works, in a controlled environment, as they had designed it. The reason for the Beta Test is to assure the users that the new system works in the real world as their business processes dictate. What this cycle has not considered is this — Does the system work for us dummies? And that's why I'm suggesting one more test between Alpha and Beta — the Dummy Test.

By Michael D. Nichols, Nichols Quality Associates

It is an undisputed fact that technology has had a major impact on service processes over the last four decades. From customer service call centers to online checking accounts, it is hard to find a key business process at a financial services firm that does not have a significant investment in technology supporting it. Because of this, one would expect that technology departments are leading the charge with modern-era process improvement efforts and methodologies. Unfortunately this is not generally the case.

By Art Gillis
www.artgillis.com

The only thing they wouldn’t say is when.

By Art Gillis
www.artgillis.com

MFW stock was trading at about $19 a share when it announced the acquisition of John H. Harland, the check-printing company.

By Art Gillis
www.artgillis.com

Two key drivers influence the financial services tech world these days: 1) vendor consolidation and 2) integration of applications. In my opinion, both make sense and they are very beneficial no matter on which side of the fence one resides.

By Art Gillis

Eleven blogs ago, I expressed my views about what a dumb idea it was for Citibank to spend billions on shortening the name of the bank and removing the red umbrella. What were they thinking? Do customers care about names and logos? Now Citi is executing a RIF to the tune of 17,000 employees. Do customers and employees care? I think they do. Put a banker back in the hot seat of Citi and I think you’ll see a better run giant. It seems to work everywhere else in the banking business. But don’t get rid of the lawyer. Just let him handle the employee class action suits.

By Art Gillis

Jack Henry always knew what the score was. More important than that, he made sure we knew the score as well. I have had lots of business encounters with Jack over the years, and not once did I ever worry about my backside. The first time I talked to Jack was by phone in 1980. I was working on a project for a small bank that needed a general ledger system. My mission was to purchase it from a small software company in Missouri. When I called to place the order, Jack wasn’t comfortable dealing with a third party, so we had a back-and-forth exercise for about an hour. That’s when I knew I liked this man. I never knew what he really thought of me. A few years later, I hand picked JHA for a client assignment at a midtier bank. The bank was in deep trouble with an outdated in-house system, and the task was to see if JHA could solve the problem. Jack flew to Minneapolis on his private plane. I flew Northwest. Jack beat me there. In the few minutes we had prior to our meeting, I told (begged) Jack to behave politely and let the bankers talk. Later we would have time to figure out the right strategy. It took about 20 minutes for Jack to figure out the problem, and he proceeded to give management his side of the solution. The bankers were the problem, and even the best new system wouldn’t do much to improve matters. We were not asked to return. But Jack had it right. Within a year, the bank had been acquired and as a result, it was rescued from a management team that didn’t have a clue as to how to run a bank.

Jack was a man of few words. Whenever I called him he answered the same way: “What are you up to now, Gillis?” His best compliment to me after I would mouth-off about an issue was: “That’s right.” Every encounter I have had with this man resulted in some form of business success, but in addition each encounter added some self analysis as to whether I got it right or not. That’s why I’ll miss Jack.

By Art Gillis

Twenty years ago I offered M&I Data Services (M&IDS) an opportunity to participate in my industry report, which was then called “Automation Trends in the Community Bank Sector.” M&IDS said no, even though 10 other prominent service bureaus (that’s what outsource companies were called then) wanted to pay good money to get in.

I’m a bit of a wuss, so I accepted the rejection. If it hadn’t been for Donald Trump, who in his letter to me on 6/2/1988 said, “Don’t ever take no for an answer,” I would have dropped the matter. Instead, I decided to go over the head of the M&IDS guy who said no and went to the chairman, a former IBMer, Denny Kuester. Mr. Kuester liked my plan, but admitted there was a little bit of bank culture interference working here. He wanted to see if he could eliminate the hurdles so I could make my visit to remove the wraps and take a good look at M&IDS. Within a week I was on a flight to Milwaukee. I put Dennis Kuester’s name on my list of “Quiet Heroes.”

What I saw at M&IDS was so impressive that I was compelled to tell my host at the end of the day, “How do you guys make a profit with so much resource added to customer delivery?” He didn’t have an answer.

When I say the timing is right today, it’s because of these reasons.

• The 1988 old timers are all gone. A new management team says yes to whatever makes sense.
• The 1988 revenue of $90 million is now $1.5 billion.
• In an industry of modest revenue increases, Metavante grew theirs by 20% in 2006.
• Metavante respects the service algorithm: good people + proven software + straight talk during the selling phase + commitment to conversion science + support no matter what = happy customers and no law suits.
• Metavante has all the right pieces of the technology pie in place.
• Metavante knows how to make smart acquisitions. There isn’t one bad apple in the barrel.
• Like all good family ties, when the children go off and do their own thing, the good ones never forget their heritage. M&I Bank will go from owner to customer, and I can’t think of a better “leaving the nest” than that.

Disclaimer: Art Gillis relies on his bank for investment portfolio management. He does not own stock in any company included in Automation in Banking - 2007.

By Art Gillis

Even though I got a degree in Accounting, I am not a CPA and Boston University didn’t offer courses in Fastow 101. I just know how to put numbers together accurately to come up with true costs. So here are some discoveries that might help bankers get a better handle on their true IT costs.

1. First, accept the fact that you don’t really know what your IT costs are. The more than 300 banks I worked for didn’t know. Some of them thought it was the bottom line of the invoice from their vendor. Others overlooked the bootlegged systems that department heads bought and coded them as “support resources.” Others didn’t know amortization from globalization. Whoever coded the expense ticket decided if it was an IT expense.
2. Annual reports of even the most sophisticated banks show a figure for technology expense. But they don’t include the IT staff because that expense is included in the total HR expense. That’s like drinking a diet Coke for lunch to cut back on your calories, and drinking three beers at dinner. It all goes in one stomach and pumps up your weight. Without people, IT halts.
3. Don’t rely on so-called industry surveys. Most of them just make you feel good, knowing you don’t stand out in a crowd. Surveys show that banks spend 10% of total operating expense on IT. It’s often double that. The highest I’ve seen is Citibank’s at 25.8%. For some community banks, it’s 6%.
4. Since there are no industry standards defining true IT costs (other than my brutally exhaustive spread sheets), force yourself to go on a witch hunt from bowels to board room in search of anything tech-looking.

Finally, don’t feel bad if you have a higher IT cost than your peers. I wasn’t a math major but the math shows that a 13% IT cost, for example, can be better than a 10% IT cost if it eliminated a host of manual functions in bank operations. The whole idea is to get to the truth so you can fix what’s broken. The General Ledger won’t do that for you. It must be a “General” problem. Even Generals at Walter Reed didn’t tell the truth.

By Art Gillis

There must be hundreds of people who have fascinating stories to tell about Ken. He not only created the first company to sell packaged bank software, but he spawned at least a dozen other companies that other entrepreneurs started after leaving Florida Software Services.

I enjoyed four projects over the years involving Ken’s company. The first was when I worked for a bank and engaged in the riskiest task of my career when I bought a mortgage system. My bank accused me of using the decision to find an excuse to go to Florida in February. The $15,000 investment worked for us because it was what I called a head start. We bought the software, modified it and used it years before we would have created our own.

Ken once had me to his house for lunch, just the two of us. I liked the mood and the opportunity to talk candidly. Ken had a reputation of being a tough businessman, so I spoke my mind. I asked him how the creator of an industry didn’t keep his grip while other companies such as ITI and Jack Henry took over. Ken’s eyes glossed over. We both stopped talking. I realized Ken was not the tough guy people said he was.

By Art Gillis

I recall six good memories out of the hundreds of calls I received from my boss at the bank. One occurred when my wife’s picture appeared in the paper for her community work. “Tell her to use the name of the holding company, which is what is listed on the NYSE, not the name of the bank.” I can confess now after 35 years and the CEO’s death, I never passed the message on to my wife, but I understood the relationship very well.

Another call was about a very good bank customer who owned a string of funeral homes. The owner’s kid wasn’t happy in the business, but he had a thing for computers and Dad wanted the kid to pursue his true love. We hired him and thought he would adapt to the graveyard shift at our computer center. He thrived in the environment and performed excellent work, earning several promotions. We were happy. The kid was happy. Dad was happy. And most important, our CEO was happy. Contrary to popular belief, including Bob Hope’s often told joke that if he ever needed a heart transplant he’d like to get it from a banker because it wouldn’t have been used much. I’m here to tell you that bankers have a heart and they use it.

A story about online banking appeared in the Washington Post about the reporter’s grandma, aka Big Mama. Big Mama loved to go to the bank to conduct her business. She would dress up for the occasion, and she probably stayed there long after the business was done. Her bank tried to convert her to online banking, but she dug in and proceeded to give everyone a turnaround lecture on the virtues of people-based service. The bank never asked Big Mama again. We all know that banks would love to save the money that free online banking provides. But their heart gets in the way, so customers can get the banking mode of their choice.

Even this technophile who spent his entire working life trying to make technology perfect, and has yet to succeed, loves the fact that there are two men and one woman in the second largest bank in the U.S. who he can call once or twice a year to get something special. Harry, Joshua and Kathy know who I am even though they deal with lots of billionaires in Dallas. Technology is always working in the background, but it sure is nice to know a banker.

By Art Gillis

First some definitions, because you won’t find them in Webster’s. There are hundreds of companies that sell IT solutions to banks, thrifts and credit unions. I focus on 70 because they supply core processing and several critical peripheral applications. Core processing apps include all deposit systems and all loan systems. They represent about 70 percent to 80 percent of what any financial institution does, from a de novo to Citi. Because these apps are integrated, it’s necessary to include general ledger and customer database as part of core applications. So if I had to justify why I pay so much attention to core processing companies, I’d say it this way: “They can make or break a bank.”

The revenue figures show there are six companies that have prominent positions as tech providers. The 7th, 8th and 9th companies are good companies, but they don’t come close to the sixth in revenue. Achieving high revenues did not happen by organic growth alone. Acquisitions played a major role. Here are the stats for the past 12 years:

Fiserv (FISV) 88
Metavante (part of MI) 26
Jack Henry & Associates (JKHY) 26
Open Solutions Inc. (private) 15
Fidelity National Information Services (FIS) 9
Harland Financial Solutions (now part of JH with a serious proposal by MFW to acquire JH) 9

Sometimes, stats are very friendly in explaining differences. The first three companies have been in business for 22, 40 and 30 years, respectively. The second group of three companies has been in business for 15, 4 and 6 years. Fiserv has made more than 145 acquisitions in its lifetime. Even though Open Solutions is technically 15 years old, I consider it a seven-year-old company after it was reborn with the arrival of the current CEO. Fidelity reached an annual run rate of $4.2 billion in four years, relying largely on the acquisition of independent companies. Hidden in all these stats is the fact that some of the acquired companies had made their own acquisitions, so if those numbers were added to the above, the impact of acquisitions would be even greater.

For what it’s worth, I see no end to the M&A activity, and I even see activity within the six. And I didn’t get my vision from the possible merger of GM and Chrysler.

By Art Gillis

In adherence to my 2007 resolution to shorten my blogs, I offer this. The only tech guy I know who made a successful career of IT and politics is Frank Lautenberg, formerly CEO of ADP and now senator from New Jersey. But he didn’t try to do both at one time. CIOs should call the shots based on what they know, the results of honest analysis, and their conviction that their recommendations are doable, not what the boss or special interest groups within the bank want to hear.

By Art Gillis

In 1989 a client asked me, “How do we know we have all the pieces of the technology pie?” That kind of no-nonsense interrogation is the mother of invention, so I responded with a graphic that displayed each piece of the pie. My client, a banker in Pennsylvania, then proceeded to color code each of the boxes on the chart and performed a reconciliation of what his bank had and what it didn’t have. He also identified each vendor that provided the solution. There were eight. For historians who are interested, I offer their names - Mellon (now Fiserv), Habersham Item Processing (whereabouts unknown), Interactive Planning (now IPS/Sendero, a Fiserv company), Bunker Aladin (now gone even though Getronics acquired the Bunker Ramo business), SunGard, Plansmith, FED and ADP.

During the next phase of what we called “Catching Up With Available Technologies,” we went on a shopping spree. Please note that every available solution did not get purchased. The max list is intended to inform by showing what the universe of bank tech includes. It does not suggest a need to buy everything. There are 128 solutions. But there are 169 boxes on the chart because I included hardware as well. The major solutions are:

core apps 17
platform apps 17
item processing 15
generic stuff that any good business uses 10
loan administration 9
regulatory compliance 9
security 8
business intelligence 5
electronic payments 5

The chart also tells some stories because I deliberately showed updates as patches to let the reader know what came after 1989. Bank examiners have been intrigued by the substance of the chart to the point of adding a couple of boxes. What else, that’s why they’re called examiners.

In 18 years, however, only nine new boxes have been added. That doesn’t mean vendors have had it easy. Every old application has been changing and expanding. But brand new, never-done-before stuff amounted to nine. For example, Check 21 is one of the nine. Just thought you’d like to know when your job is done.

By Art Gillis

Long before IT developed into a distributed architecture, the idea of protecting the bank’s data was rather simple. Lock down the computer center. The idea was probably based on an old banking rule. Put the cash in the vault every night. My bank took it a step further and buried the “vault.” That’s right, our computer center was under an apple orchard located about 20 miles from downtown Providence. The data center was indeed impressive. Enough food for 30 days, showers to wash off the radiation, mattresses under the raised floor for comfortable sleeping, and try to get in the place. In the five years I worked for the bank, I had seen it only once. The guy in charge of security was modeled after a Barny Fife. No matter what one’s credentials were, he had to know why you were there that day, and impressing prospective customers was not an acceptable reason.

We were never attacked by the Russians or even the local “Sopranos,” and after the bank’s cost analysts did their thing it was decided to abandon the “bunker” in favor of a far less-expensive modern facility in an industrial park that had bellied up, aka OREO on the bank’s balance sheet.

Please don’t assume that I was against this practical view of how much a bank should spend on data security. It hit me when I realized that our extreme security was only as good as a Dodge Dart and one of twenty-something (we had only two SSNs) Brown University students who distributed the work back and forth to the protected data center. The good news was we never lost a piece of data, nor were we ever late delivering even in severe New England weather. And the students never got speeding tickets even though we did not insist on drug testing. The bad news is that technology got more sophisticated, and we lost our grip on securing the “vault.” Data security costs about 10 percent of a bank’s IT budget. Spend it wisely.

By Art Gillis

It wasn’t February 4th, but I was cheering like crazy when Steve Croft presented his segment on the complexities of technology. Even though I have been earning an excellent living as a technology guy, I confess now that I never really loved its complexity, and I’m now out of the closet, thanks to 60 Minutes.

I got my first exposure to computers as a 2nd/Lt in the Air Force in 1958. My most used response to technology then was, “You gotta be kiddin’.” I’m saying the same thing today. As a member of USA TODAY’s Technology Panel, I participated in a survey on January 26, 2007. The question was, “Are you considering upgrading your TV for the occasion (Super Bowl)?”

This is how I responded:

I should tell you I have been working with information technology for the past 49 years. One important lesson I learned was to identify the need first, and then shop for the right solution. I just purchased a new TV because the old one broke. That need was clear and crisp, without emotion or bias. I didn’t want to buy a new one, I had to buy a new one.

Functionally, the new one is just like the old one, but the screen is a little larger. We’re not always glued to the TV, so as long as we can see a very clear picture and hear the sounds, the new TV does the job, it cost half the price of the old one, and I didn’t have to go to school to learn how to use it. The real test in selection was availability. We live in a shopper’s paradise, Dallas, and you’d be surprised how low inventories are. I didn’t choose my new TV, the shelf told me what to buy.

Speaking of that, in today’s news there are two stories about car manufacturers. (1) Toyota is #1, (2) Ford lost $13 billion. Yesterday I bought a new car. I tried to buy a Ford. The dealer didn’t have the exact color and interior for me to look at. They didn’t even have any 2007 brochures so I could at least read about it. I was offered a 2006 brochure and a cup of coffee. Am I in a Starbuck’s? I went to a Toyota dealer and within 48 hours I had the car of my choice down to the smallest detail. The Toyota salesman said yes to everything, or we can get it by 5:00 PM. Ford doesn’t have to hire McKinsey & Co. to figure out why the company is failing. But maybe Toyota did 40 years ago. Technology is great only if you realize that using it is the goal, not the process of getting it and making it work.

By Art Gillis

Solution: If your prospects and customers can get a whiff of your bad breath, then you’ll know you’re providing personal service. In the late '70, I worked on a contract, along with all kinds of other consultants, to help Citibank deploy its ATM network. Working on-site at the new Third Avenue slant-roof sky scraper, I busted into my client’s office one day and said, “I’m starving, let’s go to lunch.” He replied, “I’m so busy I won’t do lunch for several days, but here’s a card that will get you a free lunch at the employee cafeteria, and you’ll love it.” While standing in line, I recognized the CEO, two positions in front of me. Walter Wriston turned to the guy behind him, and in front of me, and asked why he was eating lunch alone. “Take a customer to lunch,” he commanded. The kid nearly collapsed and then turned to me and said, “There goes my appetite.” A few years later, Walter’s successor, John Reed, proclaimed that Citibank was going to get one million customers, one at a time. Do you see the Citibank culture here? One-at-a- time for lunch, for a credit card, for a DDA, for a mortgage, etc. Whatever the customer needs. Recently, the new Citibank culture announced a major transformation - shortening the name to Citi and removing the red umbrella (aka Traveler's logo and Sandy’s bad idea) from Citibank’s identity. Now there’s a campaign that represents real genius. I’m assuming the ad agency got management’s approval, and that’s what’s wrong with some bankers today. Would Walter and John have caved to that kind of insignificance, or would they have gone to the employee lunch room to evangelize the importance of one-on-one marketing?

Community banks have nothing to worry about as long as big bank execs are relying on Madison Avenue ideas to gain marketshare. It’s not about logos, names or slogans. The answers bank customers want these days are, “What are you doing to enhance my financial welfare, and have you taken me to lunch lately so I can tell you what’s really important?”

By Art Gillis

June 14, 1983 - Art Buchwald sent me a letter saying he enjoyed my piece very much and I should send it to Personal Computing, Popular Computing, Info World and Byte for publication. I sent the article to Art Buchwald because after I had written it, I read it and it sounded like something he would have written. So I wanted to clear it with him first. Looking back at my records, it turns out I didn’t take his advice because I was in banking, and generic publications didn’t interest me. Independent Banker magazine published it under the title, “Are Computers Really Becoming Friendlier?” I’ve got three “works of art” hanging on my office walls - George Washington, a 1958 photo of a missile in front of my office building at SAC Hq. and Art Buchwald’s letter. Sometimes I think I can hear Art Buchwald’s letter speaking to me in that unique voice.

By Art Gillis

The other night, I flew home from Boston to Dallas on what was a very nice flight. It left on time. It arrived on time. A Tasmanian Devil didn’t sit next to me. In fact, I could have had several rows to myself. I didn’t eat anything. And the PA system must have been out of order, or maybe it just didn’t blow me out of my seat. I even managed a couple of cat naps. It reminded me a little of my no-nonsense trips from SAC Hq. to Vandenberg Air Force Base in the fifties. SAC didn’t charge me a penny for 1,500 miles of travel because I was an “employee.” Today, I have no allegiance to American Airlines except that I live in their city, and yet they charged me a mere $115 for 1,700 miles of travel. They even threw in a free ginger ale. That’s why I believe the airlines are going broke. I see the same thing happening with bank tech vendors if they don’t wake up and charge more for their tech solutions.

Whether a bank chooses an in-house system or outsourcing, they’re getting a real bargain. Here’s just one example. A bank that chooses to go in-house pays a one-time license fee for software. Then it agrees to pay 15 percent to 20 percent of the license fee annually forever. Even after 30 years, a bank can run on its updated system thanks to three-times-a-year software releases, and never has to go through another conversion. Bill Gates wouldn’t be the richest man in the world if he had used that pricing scheme for MS-DOS. I think the cheap lunch idea should end. Bank tech vendors should put a time cap on their solutions, like there’s a new pricing paradigm every 10 years, or they should sunset their systems and start over every 10 years. Or maybe I’m just overreacting to the sweet deal banks are getting because it’s time for me to trade in my 13-year-old Jaguar for a new one, and there goes my budget. I wish it were like software from a bank tech vendor.

By Art Gillis

Eight days into my New Year’s resolution and I’m on track. That qualifies me to tell others what their resolutions should be.

1. Build new automated processes by throwing out the old concepts. Start by asking, “What are we doing here?" not, "How did the old system work?” In the 50s, new systems were designed as if the 80-column punched card was never going to disappear. Some bank systems today start as a customer enters the branch. But in many cases the branch is the customer’s home.

2. Eight years ago, Internet applications were developed by geeks and nerds. Today, normal people who are not geeks and nerds use the Internet. So they can’t adapt to the culture. What we need today is the humanization of the Internet. A sort of “for the people, by the people.”

It seems perfectly normal to throw away a PC after using it a couple of years. But we keep our bank systems for decades as if nothing changed.

By Art Gillis

And I’m starting with this one. That’s it.

By Art Gillis

Haynes and Boone, a prominent Dallas law firm, invites me to their free knowledge-transfer presentations. I don’t go to all of them, but this time, when I saw the subject, Intellectual Property Rights (IPR), I signed up.

What an enriching experience it was. I’ll begin with the start time - 7 a.m. I was back at my office by 9:15 and didn’t skip a beat in my day’s work. There were 83 other folks there. Forgive me, but I’m the quintessential numbers guy. I counted them.

With absolute precision, the man in charge kicked it off. A panel of six experts (three lawyers, two venture capital specialists and Nortel Networks’ in-house counsel) told me so many things I needed to know, that I wanted to leave a donation when it was all over. Instead, I sent another check to the Dallas Children’s Advocacy Center so my conscience wouldn’t bother me.

If you’re an expert on IPR, you won’t need what this rookie learned. But if you’re in my camp, read on. Rather than my trying to tell you what six experts said, I’ll tell you what an informed audience asked the panel. There were nine questions, but more followed after the bell:

1. Where does Business Process fit into IP?
Answer: It is recognized as patentable, as well as “copyrightable,” so know that patents do not just apply to a physical product. Technology is defined in the broadest sense: anything that is new.

2. Banks are beginning to collateralize IP in making loans to the owner. Is it real?
Answer: Don’t count on it from banks. In the past three years, lenders have entered into this space, but only after the VC investors took the greatest risk. And lenders are not your traditional banks. They are individuals.

3. How does one defend a patent, or fight a patent infringement?
Answer: Any startup should get a patent from Day One, even though it’s not easy and it is costly. Keep in mind that future investors do not want to pay for litigation, so do the legal work up front even though it hurts.

4. Europe has a “fast track process” for getting a patent. Does it work?
Answer: Yes, and it’s a good idea for any owner of an invention who needs to start using it immediately to get his business going.

5. What obstacles will one face in a global economy where laws vary from country to country?
Answer: Be patient, cross-country laws for worldwide protection are becoming more common.

6. How does one get a greater return on his product through the patent process?
Answer: By licensing his invention to partners and achieving business value, not just money.

7. How do I protect myself against a lender who calls the loan and takes my IP?
Answer: Most lenders don’t want the product because they wouldn’t know what to do with it. But the wording of the patent process should protect the owner. The tough answer is don’t breach the loan agreement.

8. Should we worry about China’s laws as we enter into the growth dynamics of their business environment?
Answer: China’s laws look like those of the U.S. But enforcement is different. Laughter in the audience suggested another answer - You’re damn right you should worry.

9. What value does an IP portfolio have?
Answer: Even if you don’t build the products and you license the products, it’s still a good thing to do. The patent process is expensive, but it can be worth it if you know that your business strategy depends on your invention.

What I learned from this investment of 120 minutes: I always thought one had to be a Thomas Edison or engineer to own a patent. I’m neither, but that day I found out I have three patentable products that I use in my consulting practice. A patent costs about $35k, so now I have to figure out if there is a business value for my inventions. With more consultants entering the business worldwide, there should be a market, but I’m not including my inventions on my corporate balance sheet just yet. And it doesn’t help to know that in 1971 the creator of the “Swoosh” was paid 70 bucks for what Nike made billions with.

IPR is something every owner of a new creation should be tuned into, but in my opinion, the right of ownership is like anything else in life. Now that you’ve got it, what are you going to do with it?

Disclaimer - I am not a lawyer, nor do I try to act like one. And I have never told a lawyer joke in my life probably because the 22 law firms I have worked for, as an expert witness in my specialty, have been so impressive that I wouldn’t make a risky move these days without the involvement of a lawyer. In case you’re looking for a hidden endorsement in this blog, I can assure you I have never met, face-to-face, an attorney from Haynes and Boone.

By Art Gillis

I’ve been hearing that excuse less and less each year. In 1960 I used to say it to our customers, which included General Motors, Met Life, Delco Remy, National Institutes of Health, Army Map Service and some other biggies. What made it tough for me was I was in charge of software releases for a major mainframe (was there any other kind then?) company. Hardware was the only thing we sold. Software was a giveaway. But nothing would run without the software and I couldn’t release the software until it was tested. And I needed a working computer to test it. I apologized a lot. And I worked the graveyard shift a lot because I could scrounge time on any Honeywell 800 computer I could find in the Boston area. Fortunately I was single at the time and no one was looking for me at 3 a.m.

Unfortunately, I didn’t have any girl friends at the time because decent girls were usually at work at 3 p.m. when I would gain consciousness. I was the ultimate nerd before the word was even invented.
Over the years, I had experienced so many disappointing events in the implementation of IT projects, that in 1992 I wrote a little book about 43 of them. The title was, "Sorry, Our Computers Are Down.”

Here’s just one example: The FDA hired us (a major consulting firm) to develop an information system that would better use the resources of food inspectors in the field. It was in vogue then to budget according to program goals. As it was explained to me by the FDA, if rat terds in bread are sterilized during the baking process, why should our inspectors waste their time looking for rat terds? I stopped eating bread after that and now enjoy a 34-inch waist line. We built the specs for that system in 1969 and charged the FDA $1 million. Right after that, the Nixon Administration came to power. A new FDA Commissioner took over and proclaimed our system as impractical. Nineteen volumes of systems specs were trashed, and if you paid taxes in 1970, you have a right to bitch to your Congressman for waste in the Federal Government. For all my Republican friends, take comfort in the fact that change can be good. A Democratic Congress may just be the solution to solving a stupid decision to go to war in Iraq.

These days, reliability of technology is a lot better. For example, I heard the excuse this morning from a company that couldn’t schedule my semi-annual heating system maintenance. No problem, it was only about the fifth time I heard the excuse from a variety of service companies all year.

For a world that now relies on real-time action, the bad news is that 99.999999 up time just ain’t good enough.

By Art Gillis

Intuit and Microsoft have always had a taste for banking, but somehow they were missing the nuance and culture that are so important in banking. Bill Gates called bankers dinosaurs, not the ideal way to break into a club. Intuit knew how to keep the books, but it didn’t know a deposit from a loan. Now Intuit solved its problem by acquiring a banking company, one that does banking the future way, electronically, not the old way, “paperbound.” What struck me was the enormous initiation fee to get in. While the current price paid for a bank tech company has averaged 2.13 times revenue, Intuit paid Digital Insight shareholders a whopping 6.3 times revenue. Maybe Intuit knows something the rest of us don’t. And I certainly missed the predication in last week’s blog. I talked about the generics and came close with Microsoft, but I missed Intuit entirely. Automation in Banking - 2006 lists 19 Electronic Bill Presentment & Payment solutions. Maybe Microsoft will shoot high and go after CheckFree.

Blogger’s note: Automation in Banking - 2006 includes 81 bank tech companies (250 solutions). But Microsoft and Intuit are not included despite repeated invitations to appear. I always felt there was a connection between bookkeeping software and banking systems, and I’m happy that Intuit confirmed I got at least one thing right.

By Art Gillis

Twenty years ago, there were 113 companies (in-house and outsource modes) offering core apps services to banks and thrifts. Today, there are 29. In 2006, there was only one transaction among core companies. RDSI (a bank-owned processor with 70 customers) acquired Diverse Computer Marketers Inc. (30 customers). So it now appears the well is dry in terms of pickings by the popular acquirers. But I believe there’s still a little play left for those who want to toss out the old models and try new approaches. Here’s how I see the future landscape. And I haven’t had anything stronger to drink than apple juice.

The top six players (Fiserv, Fidelity, Metavante, Jack Henry, Open Solutions and Harland Financial Solutions):
I’ve been saying it for the past four years, so eventually my prediction will come true. Two of these companies will merge. The possibilities are anything but obvious. Open, with its new source of abundant private equity funds, could acquire Metavante, Jack Henry and Harland FS to put itself in the cherished #3 position of the Big Three. Or Metavante could finally go public the easy way by acquiring Jack Henry. Fiserv and Fidelity won’t be players in this field. Mind you, these six companies could survive on their own, but I can’t imagine Wall Street looking the other way and leaving these companies to manage their affairs just for pure business success. Something’s got to happen here.

Of the 23 remaining companies:
5 (representing 386 customers) are reasonable candidates for acquisition if they don’t get too greedy.
7 are locked out as acquirees by their own ownership, culture or desire for independence.
8 just don’t have the appeal that a typical acquirer looks for.
3 are buyers.

If you’re wondering why I haven’t included Fiserv and Fidelity in the acquisition game now, it’s just because I have been talking about core companies and banking. I believe these two companies will be looking for opportunities in other vertical industries that still have some connection with words such as “payments,” “financial,” “market stimulation,” “health, wealth & welfare,” and “anything analytical.” If these predictions don’t excite you, how about a reverse direction with visits from Gates and Ellison, looking for ways to get vertical. Or finally, with Accenture, ACS, BearingPoint, CSC, EDS, H-P, IBM Global Services, Perot Systems, SAIC and Unisys looking for much needed growth, anything’s possible for two $4 billion-a-year plums.

By Art Gillis

Global economics says a $29 shirt at Wal-Mart was manufactured by a worker in China who was paid seven cents to make it (the coins whose copper value is worth more than the face value). After the shock wore off, I worked on a few value-add services closer to my own business. Free checking, for example, has been available for decades even when it cost a lot to produce a checking account. Now it’s really free, but not for banks. A typical outsource vendor charges a bank $1.08 per month per account for the computer processing service to produce an average (22 trans) customer account. But the cost model vendors are using is as obsolete as a free toaster for opening the account. Take a look.

Checks aren’t as much a part of the equation as they used to be, so input costs are lower. Fine sorting and storage costs are lower and in many cases have disappeared. Reject/reentry costs are lower. Workers in the statement rendering departments have become the current generation of their parents’ generation of unemployed factory workers. Processing costs are lower thanks to ongoing improvements in electronics (smaller, faster, more powerful and cheaper). Some banks that do their own processing once battled the clock to get their work done by seven the next morning. Now the posting and updating run takes about an hour. If the bank is up to date, it’s a lights-out operation, so there’s no labor cost. And some day, there won’t even be a posting and updating run because everything will have been done in real time, before a teller could finish saying, “Have a nice day.” Transporting output by courier is now a function of the Internet delivery channel and I don’t believe Internet engines are run by gasoline. Even low-cost call centers in Mumbai aren’t busy in a do-it-yourself banking world where banks are pushing customers to “go online.”

So it seems to me that the likes of Ralph Lauren or lots of middlemen between the Chinese worker and the consumer are making one heck of a huge profit because the ultimate payer in the chain hasn’t realized that the benefits of the flat world Thomas L. Friedman wrote about two years ago are actually working. I wonder why my bank is charging me 15 bucks a month for my checking account, and I’m not even getting an animated polo player logo on my bank account screen.

By Art Gillis

First, I must tell you that my wife and I are complete opposites. I call her analog. She calls me digital. She’s an artistic person seeing shape relationships that I couldn’t discover if I had the benefit of a ten-year exile at the Institute of Computer Aided Design. She looks at a house and instantly relocates the placement and scale of the windows. Ask her about a “9” and she’ll talk about its lack of symmetry and top heaviness. I’ll describe it as 1001, its binary bit configuration. There are hundreds of versions of the color white. A nine is a nine no matter where you are. So just imagine these two people trying to reach a harmonious level of understanding with regard to the Internet. For my part, I psyched up myself to adopt the persona of sweetness, a word that I never associate with men. Here’s how I will start the process before we even get within 50 yards of a PC.

• Give up everything human, logical, mother’s teachings and Emily Post. The Internet is made up of billions of “robots” that can’t react to the statement, “You know what I mean.”
• What normally works when a human is involved gets rejected when the Internet governs. I filled out a form online recently and provided “M.” as my first name. After completing the entire form, it was rejected with a note in red saying, “enter a correct first name.”
• Don’t waste your time communicating with a Web Master or “info@.” You’d be as foolish as if you wanted to speak to a highway billboard. No one will answer.
• Be absolute. Just like when you tell me to pick you up at 6:00. Not 6:00ish or around 6:00. Computer technology is very absolute. A 9 is a 9, not 8.99999999.
• When asked your mother’s maiden name, just give it to them, and pray that even when you get old, you’ll never forget it.
• 98% of the e-mails you receive will be junk or scams. After a while you’ll be able to spot them. For now, beware of anything with the words “friend, congratulations, account, paypal, ebay, diet, health, low-cost, plural representations of some words such as informations, and anything having to do with the stock market.” And don’t waste your time with anything from a bank. Banks don’t use e-mail except the quintessential marketeer of all time - Citibank.
• When you send text, especially to family, write it as a document first so you can edit the heck out of it. Then paste it as an e-mail and send it. Writing online is hazardous. You can’t fix misinterpreted words once the e-mail is sent.
• There will come a time when someone tells you they didn’t get an e-mail you sent. Don’t believe it. The Internet has spawned an entirely new compendium of excuses to cover up blame. Just take it in stride.
• Booking reservations can be risky. Spending two hours surfing for the cheapest hotel rate might save you 10 bucks, but the third party will take your deposit in a microsecond. Remember when you booked directly at the Roosevelt Hotel in NYC and had to cancel due to the flu? The nice lady not only canceled but wished you a speedy recovery.
• Search engines are electronic encyclopedias and then some. The more words you give them the better your search results will be. And this is one time you can believe the word “free.” And don’t worry about how Google makes money. If you had invested your funds in Google when it IPO’d, you’d be one rich chick today, about five times the $85 price I advised you to use your funds to buy it.
• Learn to curb your emotions. The Internet is technically less than 20 years old. Eliminate the first five years as experimental, and you are now dealing with a 14-year-old technology. Did you know everything there was to know when you were 14? Don’t answer that.
• Finally, use the Internet as an information source and as a message transporter. Do not use it to move money. This is from your loving husband, even though my loved clients would consider this advice a form of professional suicide. Bankers want the Internet to do all their dirty work so they can just focus on “Have a nice day.”

Catch ya’ later when the first step will be: How to turn on the computer.
What’s that book in your hand? A primer on the Internet. Burn it. I’m all the technology education you’ll ever need.

By Art Gillis

I really believe in expert services, so rather than a visit to a Web site that offers do-it-yourself healthcare, I make the huge effort of going to my doctor - twice a year whether I need to or not.

The first question in the usual examination process was, “So how is the banking business?”
Caught a bit off guard, my quick answer was, “Banks are making more money and handling risks well, but the tech companies aren’t so well off.” I hardly finished when the good doctor rattled off a most eloquent statement as to why he believed the leveling off scenario in new tech offerings. “Everything is electronic now, and with the Internet, we as customers get our banking done easily, quickly, conveniently and accurately. Bankers found the cure. Healthcare should be that successful.”

In recent months, I have been hired by other kinds of experts: those who invest in bank tech companies. They’re not convinced that the bank tech business has leveled off. You can see concrete examples of walking the walk, not just talking the talk. The acquisition of Open Solutions Inc. by investors. The total emersion of the biggest title insurance company (FNF), and now the tech company’s (FIS) takeover of its acquirer. A small startup (GFSI), which has had more Wall Street activity than business activity, with an oversubscribed secondary offering. Software giants such as Oracle whose database systems didn’t know a deposit from a loan now own a majority interest in an Indian bank tech company with an intent to overwhelm the U.S. With $100 million to invest in acquisitions, TEMENOS is waking up to Fiserv’s 21-year old strategy of acquire the competition. And when all else fails, bring in a new CEO. That’s what Misys did, and I presume they’ll be overcrowding the U.S. market also.

It’s very clear that investment money is looking for a place to land, and the vendors are lining up. The next phase will be: Are the financial institutions buying? That’s when the final score will be tallied. The doctor and I know where we stand. What do you think?