Core Systems

11:10 AM
Art Gillis
Art Gillis

Drama and Intrigue in the Core Systems Market

What was once a boring state-of-technology-in-banking report could now serve as a movie script for Oliver Stone.

I have heard of the banking crunch, the one and only downgrade, high numbers of bank failures, bailouts, bank fraud, foreclosure screw-ups, free-fall mortgage lending, big-name Wall Street failures, stupid acquisitions by wannabe heroes, CEO firings, hotel room scandals, politicians playing economists, the quest for jobs, credit limits once a cardholder issue, and unprecedented stock market gyrations. But bank technology has never really caught the attention of press room histrionics.

So what's going on with the 2011 Edition of Automation in Banking? Here's what I saw:

Whereas many deserving companies were given an invitation to appear in the report, several refused, and it was not that the invitations got trapped in their spam folder.

One situation was deserving of special treatment since it was similar to a "60 Minutes" episode where a Greek Orthodox monastery never allowed publicity, reporters or cameras to appear on their private turf. Even correspondent Bob Simon was surprised enough to ask the chief monk, "Why now?" The answer was simple, "You persisted." I persisted as well and used a human wedge to present my case, asking an employee to influence his company to accept. He promised to try and he even mentioned the name of the guy who I had sent dozens of e-mails to in the past. But it didn't work. After seven years of invitations, Fundtech is dug in. I gave up. You won't see Fundtech in the 2011 Edition.

Looking at the no-response list, I concluded that profiling was in order. Based on two criteria, banking and tech solutions, 60 percent were legitimate candidates and should have accepted the free exposure. They never responded. Then there were 28 percent that were international-based but exposed to the U.S. market. I believe Hillary Clinton could explain their refusal to accept. Finally 12 percent were large systems integrators who suffer from an organizational structure consisting of multiple fiefdoms. If you can't find the right head of a business unit in the company, fuggetaboutit. Systems integration companies don't understand corporate structures. It's every man for himself.

Seven new companies entered, invitation only, with names like Jumio, Malauzai, Solutions Only, and Path Solutions. All responded to the invitations immediately and added technologies never before listed in the report. That's why I went after them.

The largest software company in the world wanted in but was a bit too aggressive in its claim of owning a bank core system. When I suggested the word "partner" instead of "own," they insisted on their words. The invitation was withdrawn.

After several years of rankings in the VARBusiness 500, the Big Three core systems vendors were dropped in the 2011 list. When I asked why, I was given a line of corporate double talk that only a PR person could write. But innovation trophies awarded by Information Week to five banks seemed real enough. The five banks made it four years in a row. Only two were the traditional kind of banks, with retail and business banking. And none of the giants made the list. They must have been too busy innovating survival schemes. But the largest banks grew their IT budgets significantly. One can only assume IT was producing tons of database retrievals in support of lawsuits and foreclosure mishaps.

While things have slowed down in U.S. core sales, ironically there's been an increase in core offerings from international companies as well as generic giants. That may simply be a sign of optimism, or after 20 years of predicting the death of legacy systems, maybe the pundits are now being heard. Or perhaps an article in the Harvard Business Review cranked up a new movement. Certainly the 2003 article about "Technology Doesn't Matter" got plenty of attention.

Well, I didn't want to be the only guy having fun with behind-the-scenes activities so I'm sharing them with you. Just know that the other 629 pages of the report are still like the past 26 years -- boring tech stuff about how to make banks better, wiser and profitable. Of the 33 categories of solutions, three scored highest in number of offerings -- business intelligence/database, risk management and compliance.

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