The value of a vendor's press release varies according to who is reading it. The difference is the equivalent of being served a crawfish etouffee dinner at Bon Ton in New Orleans vs. a display of raw ingredients on the chef's workbench. The creator of a press release wants to sell something; an analyst who reads it wants to boil the content down to bare facts. I want both sides of the story.
I read press releases that have anything to do with bank technology. That's a broad range so I get lots of them. In truth, some of them get the five-second-scan-and-pass treatment.
A recent press release caught my attention because it provided the perfect case study for many good rules in the selection process of a core system. My first step was to convert the narrative to a document similar to what an engineer would create as a system specification. Or, as Joe Friday would say, "Just the facts, ma'am." For any of you who were watching the Howdy Doody Show at the time, you won't get the Joe Friday (Dragnet) thing.
If you think this is a witch hunt, I'm happy to disappoint you. This press release was perfectly legitimate, informative and clear enough for me to do this without asking for help. I'm just offering my personal interpretation, and I never spoke to the vendor or the financial institution about it. I am flying by the seat of the vendor's words alone. And let's face it, many press release readers are doing the same thing. We either get it or we ignore it.
Since this is a reality check, I'll begin with the first five words of the headline - Complex Community Federal Credit Union. Are they kidding? In a new world where banking is supposed to get easier to understand, what does "complex" mean? It probably won out over the second choice, Risky Community Federal Credit Union. I didn't bother to find out.
Here are the facts along with my comments, for what they're worth:
PR - The credit union has 30,000 members and $273 million in assets. Me - There are 1,607 financial institutions in this size category; 322 are credit unions.
PR - It switched from an in-house system to an outsourced solution. Me - The growing trend for outsourcing started to show up in 2006. In that year, 60% of all new core sales were outsource. In today's environment, and for this size institution, 51% use outsourcing.
PR - The credit union's three reasons for selecting the Fiserv Portico solution were: Robust functionality Disaster recovery strengths Superior client service record Me - My reaction, from afar, agrees with the functionality test. In the past fifteen years there have been heated debates about the value of new architectures and the demise of legacy systems. Legacy systems get beat on because most of them use antiquated architecture. The truth is that bankers choose core systems and technicians choose architectures. That's why legacy systems are still the core systems of choice in the banking industry. Bankers lead in making the core choice and they want functionality. Functionality is something like wisdom. It takes a long time to acquire it. Disaster Recovery is a common and necessary service for any financial institution, so I don't understand why it deserved the #2 spot on the list of reasons. Of course, I live in Dallas and I don't even know where Odessa [Texas, where the credit union is based] is so that's my personal perception. As Tip O'Neill once said, "All politics is local" and Odessa may have unique local reasons for relying more heavily on backup. The third reason given by the credit union had to do with vendor support. Today, vendor support is strong among several vendors so I understand the importance, and I can confirm the statement based on the experiences of my clients. Fiserv is known for its strong customer support. In fact, after observing Fiserv for 26 years, I have concluded that Fiserv treats its customers and employees as #1. I don't know what #2 is.
PR - The credit union added 11 ancillary solutions besides the new core system. Me - That's the norm these days. The ancillaries chosen don't represent 100% of what's available but that's the norm as well. Does a grocery shopper buy everything in the supermarket? The credit union exercised another wise move in the selection process - buy the ancillaries offered by the core vendor in order to assure integration. PR - Implementation is scheduled for seven months after signing the contract. Me - Perfect. Conversions are not like an oil spill. Take your time and do it right.
PR - The CEO's reasons for the choice: • Vendor's R&D commitment • Strong customer service • The staff chose the product Me - Perfect. The third bullet is music to my ears. Who knows the daily business of performing transactions better than the staff? They should be the ones to choose the tools of their trade.
PR - Vendor's statements: PR - Outsource method of processing is now growing Me - Correct
PR - Implication that outsource is less expensive than in-house Me - Wrong as a general statement. It's an individual case depending on the bank.
PR - Implication that outsource solutions provide advanced functionality Me - Wrong. Functionality is determined by software. If the software is the same, functionality is the same no matter if it's in-house or outsourced.
PR - The outsource solution provides a zero footprint infrastructure. Me - Geek talk. Why not say a bank doesn't need its own computer and thus eliminates the headaches of operating its own computer.
PR - Interface based on Microsoft .NET Me - True
PR - Intuitive navigation Me - That's a matter of opinion and is arguable. Are Bill Gates and Steve Jobs intuitive? Steve Jobs invented intuitive. Bill Gates adopted it. The user is the only judge of how intuitive a solution is.
PR - Logical workflows Me - It's a great goal, now can you prove it?
PR - Expedited training Me - What does that mean? The user manuals are sent by FedEx?
PR - Tight integration for ancillaries because they are vendor-created products. Me - Correct, although I don't know what "tight" means. "Integration" is good enough for me. And single vendor is a huge advantage.
No one asked me to write this blog. I write for the same reasons fish swim. It comes naturally.
I have worked for 321 banks and I recommended core systems for them. The companies whose products I recommended are FIS, Fiserv, Jack Henry, Harland Financial Solutions and Computer Services, Inc.
I have never worked for a credit union, although as a lieutenant at SAC Headquarters, I had an account at the Fort Crook Federal Credit Union in Bellevue, Nebraska. I loved it, even though I never set foot in the place after I opened my account. As early as 1958 the credit union accepted my payroll deposit electronically, and my military ID was the best "ATM" I ever needed to get cash no matter where I was. Banking was very simple then.