The switch from analog to digital banking is not just about new tech – part 2
Art Gillis: Navigating toward technology directly to fix the bank is a huge mistake
Art Gillis, a seasoned banking technology consultant (working in the computer industry since 1958 – and listed as a top 25 tech consultant by the American Banker) and author, pulls no punches in this opinion piece. Digital technology evangelists, read it at your peril.
This is Part 2 of Art’s article. Click here to read the first instalment (and what a read it is!).
The risks of navigating the future – be careful what you wish for
Before the words “legacy” and “start-up” appeared on my screen, I would have given a high grade to the bank tech companies that got us to where we are.
Mundane labels were pasted on three groups of providers: core processing, ancillary applications, and best-of-breed software products. But now all that stable and seasoned technology has been attacked, at least by pundits, and labeled as your grandfather’s technology.
The suggestion seems to be a massive conversion resulting in a whole new replacement effort. And this suggestion is something to pay attention to when one of the main technology research firms is promoting the idea. The following is my response to a recent article created by Gartner Research.
1. Gartner claim: Banks are under pressure to improve digital offerings
My comment: Wrong
This would be true only if banks pulled the plug on present systems before the new systems were ready. Remember, the work gets done every day, otherwise 12,382 US financial institutions wouldn’t be in business.
2. Gartner claim: Incumbent IT vendors have dragged their heels
My comment: Wrong
50 years is a long time, but the list of projects completed is humongous. Most vendors today would win my prize for speed-to-market if I offered one, because new solutions is the greatest feed to a vendor’s profitability. Wall Street’s admiration of FIS, Fiserv, Jack Henry & Associates, D+H Corporation and Computer Services Inc (CSI) speaks to that point. All five are happy, as are their stockholders. But some customers of the five will gripe from time to time. It goes with the territory.
3. Gartner claim: By 2019, 25% of banks will switch to start-ups
My comment: Wrong
Either research firms have the clearest crystal balls or they get paid for hyped projections. No one knows what will happen in 2019. And no bank will turn on the steam just to be a progressive follower of any Great Guru. And we haven’t even seen the last of the start-ups. So this projection is not just wrong, but bordering on fraudulent.
4. Gartner claim: New vendors will do better than incumbent vendors
My comment: Wrong
Please refer this stupid assessment to 68 vendors in my annual research report, and they will provide you with hundreds of reasons why this statement is ridiculous.
5. Gartner claim: Start-ups are innovative and will pass it on to banks
My comment: Infantile
And the tooth fairy will solve all of banking’s problems.
6. Gartner claim: CIOs must select new vendors
My comment: Infantile
Really? And give up all the vendors that have been doing the job well for decades?
7. Gartner claim: CIOs must evaluate risks with new providers
My comment: Infantile
They know that. They did it with the legacy providers.
8. Gartner claim: Legacy vendors have been slow to react to customers
My comment: Wrong
Tech vendors have lists of to-do projects that add up to three years of work in the pipeline of development. If you want to provide a solution to that problem, offer it, but “hire Accenture to reduce the problem to one year” is not an option.
9. Gartner claim: Incumbent vendors do not support open architectures
My comment: Prove it
Some do and some do with unique methods. The real question on this issue is why are some progressive banks still choosing legacy systems. Example: Umpqua Bank chose FIS’s IBS core banking system. In 2014, 69% of new core sales were legacy systems.
10. Gartner claim: Fifty-cent words that only a naive person would buy
My comment: Infantile
I didn’t know Gartner was a marketing firm also.
11. Gartner claim: Many banks have already done the transformation
My comment: Wrong
Define “many”. Define “transformation”. Digital banking is a multi-year work in progress. And there’s a lot more to digital banking than mobile banking.
12. Gartner claim: Ya gotta have a new acronym – OUDBP (Open Unified Digital Banking Platforms)
My comment: Nonsense
I can’t even pronounce the acronym.
13. Gartner claim: New vendors will do everything that banks need
My comment: Dreamers
There’s that marketing guy again.
14. Gartner claim: Digital banking market is fragmented
My comment: Infantile
The same is true today. One vendor can’t do it all. I found that out when a client used my graphic called “My Idea of a Complete Banking System” (189 bank function solutions) to identify seven providers on the chart that relate vendor and function. These are the reality guys I listen to, not the ivory tower people.
15. Gartner claim: CIOs should be prepared for disruptive change
My comment: Infantile
Thank you very much. We will put off our sabbatical ’til next year, or better yet, after we retire.
16. Gartner claim: Some existing solutions have been available for several years
My comment: True
The best claim any tech vendor can make is, “We’ve been doing this for a very long time. What’s on your resume?”
Conclusion
The main thing financial institutions should be doing right now is to address the analog piece of banking. And the biggest fix, in my opinion, is taking care of customers. It sounds trite, but one look in a large branch provides strong evidence – one teller, 15 customers in line, who should be at a digital device, while the only customer being “served” is trying to resolve an issue that sounds like peace talks between the Palestinians and Israelis.
Fix the bank first and then examine technology. Navigating toward technology directly to fix the bank is a huge mistake.
And, finally I’d like to add my one piece of good news. There are lots of good tech solutions in today’s marketplace. Which means there are lots of financial institutions that are doing a good job. Change may not be the best thing for them.
