Bank Systems & Technology: The Blog

Outsourcing is Now More Popular with Banks than In-House, and Bill Gates Knows Why

Mon, 12 May 2008 09:14:45 -0500

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.

Fate of Business Process Patents In Hands of 12 Judges

Fri, 09 May 2008 16:19:53 -0500

As discussed in my earlier blog on patents, the courts and Patent & Trademark Office have been struggling with how to define whether something that is a business method is patentable material. Some feel that business methods are intangible and should not be eligible for patents, unlike a traditional hardware-based patent. Many of the patent attorneys I've spoke with say that the U.S. patent system wasn't designed to keep up with new technologies, such as software and business processes, and that is why we are seeing so many problems around these kinds of patents.

Customer Bank Fees: Mint.com Takes on Wells Fargo

Wed, 07 May 2008 12:44:37 -0500

At a recent Web 2.0 panel discussion held in New York (courtesy of Celent), the concept of �rich user experience� dominated the discussion. Danny Peltz from Wells Fargo confessed that his bank�s rather cool Stagecoach Island website, complete with avatars, was begun on a bet. But is this the rich experience bank customers really want from their financial institution? A good-natured but pointed exchange followed from the panelists.

Today�s CIOs are No Better Than the CIA When it Comes to Giving Accurate, Defendable and Persistent Advice to the Boss

Mon, 05 May 2008 10:34:42 -0500

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."

ISO20022/UNIFI is the Answer � What was the question?

Fri, 02 May 2008 13:56:24 -0500

By Wayne Meikle, Financial Services Director, IONA Technologies

People tend to equate ISO20022/UNIFI directly with XML. The benefits are a global set of common standards based on more open and cost-effective XML technology platforms�so life gets easier, doesn't it?

Risk Professionals Will Continue to Thrive in Risky Markets

Fri, 02 May 2008 09:58:19 -0500

If you're a risk professional, you're in luck. According to the fourth annual Professional Compensation Survey by risk management executive search firm Risk Talent Associates (RTA), today's risk professionals are taking home heftier paychecks. The study looked primarily at risk pros in the capital markets space and found that average total compensation increased by 7 percent in 2007 over 2006, with an 8 percent compound average growth rate (CAGR) since 2003. The survey notes that compensation for managers specializing in market risk or credit risk is almost equal, and only slightly less than compensation for those focused on enterprise risk.

If I were the CEO of a bank, I would....

Mon, 28 Apr 2008 10:50:45 -0500

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. ...

The Greening of Banking

Mon, 28 Apr 2008 08:24:56 -0500

On the first Earth Day�April 22, 1970�I enthusiastically did my bit for the environmental cause by volunteering with some of my fellow high school students to run a car wash that was supposed to raise money and awareness. Of course it didn't occur to any of us that there was something inherently contradictory about trying to save the environment by washing cars. We felt optimistic and productive and kind of noble. We knew we had done something good, although none of us would have been very successful at explaining exactly what we had accomplished.

Transfer Limits: Reducing Risk at the Expense of Convenience

Thu, 24 Apr 2008 09:49:41 -0500

To fund a study we�re conducting in our brokerage research, we recently attempted an online transfer of $5,000 from a Citibank account to a linked Charles Schwab account. We had done this before without any problem, and were surprised to note that Citibank recently reduced the daily limit for outgoing inter-institution transfers (IITs) from $5,000 to $2,000.

Can Anyone Stop DataTreasury In its Patents Crusade?

Wed, 23 Apr 2008 15:24:27 -0500

It looks like Data Treasury has claimed yet another victim in its patents game. It was announced recently that PNC Financial was the latest FI to settle with the notorious patent litigant over technology around electronic check imaging.

The Price of a Stock has Never Influenced My Recommendation of a Bank Tech Vendor

Mon, 21 Apr 2008 14:12:10 -0500

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.

Will FICO Scores Suffice In Credit Crunch World?

Mon, 14 Apr 2008 12:35:45 -0500

By Clark Abrahams, Marketing Director, SAS

Is a new credit assessment the intervention needed for the subprime crisis? As I follow the unfolding mortgage crisis, one thing is abundantly clear�there is significant room for improvement in current credit assessment approaches. Credit scoring has not done an adequate job of assessing risk in the subprime mortgage market. That fact is beyond dispute. Simple re-calibration of the existing models will not fix the problem of the blind spot in today's underwriting practices.

Fewer Bank Tech Vendors, but More Solutions to be Had

Mon, 14 Apr 2008 12:22:09 -0500

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.

Industry Collaboration Vital to Banks� Viability

Fri, 11 Apr 2008 11:27:46 -0500

I recently attended the SWIFT Operations Forum Americas in New York. While there, I had the pleasure of hearing some very influential people from the financial services industry speak. Foremost among the FS heavy-hitters (to me, anyway) were the executives who spoke during the second keynote address. It wasn't a keynote in the traditional sense, but more like a panel. Attendees were invited to hear what Bank of America SVP Len Heckwolf, Thomas Halpin, SVP at HSBC, RBS's CIO Edward Glassman and Roy DeCicco, SVP, JPMorgan Chase, had to say about how the payments and treasury management space is changing.

These May be the Best of Times for Some Bank Tech Vendors

Mon, 07 Apr 2008 11:46:44 -0500

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.