Chins Up!

These are the best of times for community bank technology

By Art Gillis

I have seen the worst of times because I joined the bank tech industry in 1969 during its formative stage. Back then, the CEO of a Rhode Island bank was building a holding company strategy that included beefing up the tech subsidiary (which also served the bank). His strategy was clear—build a smaller version of Citicorp.

In 1969, I was recruited from Booz Allen & Hamilton to transform an old data processing system into a modern resource that bank correspondents would love to piggyback. Five years later we got to an acceptable level, but we were nowhere near where the industry is today.

I am no longer the cynic I used to be. I am now an advocate for technology even though I haven’t built any of it. A lot of credit goes to 82 technology companies. Here’s what I mean: Diversity. There are 184 automated applications (33 groups) available in a total bank system, according to “Automation in Banking – 2013,” my 28th annual state of the industry report. Large and small technology companies are offering these solutions to any size bank at a fair price. Community banks don’t have to build anything. At past ICBA seminars I have conducted, community bankers wanted to know one thing—after learning for three days of system features, functions and usability: “Where do we go to buy these solutions?”

Talk is cheap; vendors deliver value; bankers deploy. Attendees got their money’s worth.

Scalability. Take, for example, one large-bank technology company’s system, only one of 72 bank core processing products in the world. The company’s system can fit the needs of a de novo community bank as well as a multi-billion-dollar bank, and the system’s cost is scaled to the size of any bank.

Timeliness. Responsible bank-tech companies have always been ahead of the curve. Examples include Check 21. While bankers and regulators were trying to figure out the specs for image check exchange, tech companies moved forward, ready to deliver their products. After 2008, tech companies enjoyed a nice surge in business as compliant bankers entered the marketplace to implement the mandates of the Dodd-Frank Wall Street Reform Act.

Customization. Today’s technologies are designed to fit the tastes of individual banks. “Which way do you want it” is not sales language. It’s from the implementation teams of industry technology vendors. System designers knew there were many ways to skin the cat, so they expected change and built systems to manage change smoothly.

Support and Service. Rookies need not apply for positions in bank-tech support. Vendor teams have seen it all and are quick with answers. First, they deal with mature, reliable systems. Second, they deal with thousands of customers that have used every piece of every application.

Some people call them software legacy systems. I call them “been there done that.” There’s no sweeter sound to a community banker than when a tech-support guy says, “I know what you’re talking about and I can solve the problem.”

One CFO of a big community bank core processor company spent 30 minutes talking to me about the outstanding grades his company’s customers gave the company’s support group. I believed it all because I had heard the same comments directly from my clients who are also the company’s customers.

Integration. There is no such thing as “fully integrated.” If you buy a suit, and the pants match the jacket, you’re 80 percent there. The shirt, tie and shoes don’t have to look the same. Today’s core technology companies sell everything, including, on average, 15 ancillary applications. But they also recognize best-of-breed and will adopt those apps when a customer wants them.

Conclusion. The rules for technology under the new normal are similar to what I use with my plumber: Fix the leaks, give me energy-saving fixtures but no gold-plated faucets. Technology puts “independent” and “community” back into the old normal character of relationship banking. Whichever company a community bank selects as its primary technology provider, the blueprint of those systems will be unique to the bank and its customers.