When IBM pays a huge premium to acquire a marketing software company, banks should at least see that as a signal of prudent positioning and put marketing software on their IT project list.Granted, IBM has a cash "war chest" that could pay for several wars, but when IBM acquires a relatively small company at a 129% premium, it's not just a ho-hum event. IBM knows something that others missed. Most bankers, for example, might react by checking their bank's investment portfolio to see how much IBM's stock gained as a result of this acquisition. And then they'll return to their all-encompassing business of transaction processing. Bankers cover a customer's monetary transactions faster, more accurately, and with real-time reporting than Entertainment Tonight covers a celebrity scandal. But enterprise marketing in banking is still an art form, not a technology.
As I have ranted and raved before (August 3, 2010 blog), marketing is not a strong capability in the banking industry. In the 2010 edition of Automation in Banking, Customer Relationship Management (CRM), as we call it, is one of 35 categories of solutions offered by tech companies. Four bank tech vendors are represented - FIS, Fiserv, Harland Financial Solutions and Jack Henry. Call it a coincidence in timing or "this guy's right on the money," but the Vice President of Business Development at Harland Financial Solutions posted a comment on August 10 listing 14 client success stories in response to my August 3rd blog. They were all about marketing and CRM.
Notwithstanding Harland's interesting success stories, and I imagine similar experiences at FIS, Fiserv and Jack Henry, there is evidence that these are the exceptions for the banking industry as a whole. In the past four years, there were 39 hot apps that bankers were buying. Each year, the list was a bit different in that some were really red hot. But CRM has never appeared on the list. That fact flies in the face of IBM's due diligence team because the $480 million price IBM paid for this marketing software company is about five times more than the price which bank tech companies typically pay for an ancillary solution acquisition. Either the IBM due diligence team had too many mojitos or they know a whole lot more than we do about the future of marketing solutions.
It appears now that a few banks got the message about how to attract prospects and customers. IBM got the message by paying a huge price for a company that is ahead of the curve. Four bank tech vendors have been ready with marketing solutions, but they aren't yet experiencing a strong demand. Unica, the acquired company, claims 1,500 customers, but does not identify any banks. Is this the next big technology for banks?
It seems reasonable that more banks need to make a strong showing of their commitment to a technology that is sorely needed - one that builds culture to enhance a bank's relationship with customers "tomorrow" rather than one that accounts for transactions that occurred "yesterday." Banks have all the transaction software they need. They now need brainware.
If bankers begin to focus their sights on how to really attract the right prospects, marketing solutions may show up as a hot app in the 2015 Edition of my report. It takes a while for some good things in banking to pick up steam. As for Unica, IBM's spotlight on this company will become very hot. IBM will do everything in its power to make this business grow because Unica's $100 million in revenue is an embarrassment to a $96 Billion tech giant, as well as to Mr. Palmisano's perfect acquisition record of the past eight years.
Blogger's note: Two things prompted this blog: 1) The comment posted by Sam Kilmer on August 10, and 2) the IBM announcement on August 13.