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Bank Systems & Technology: The Blog

« April 2008 | Main | June 2008 »

My experience with EDS goes back to 1962, not because it was day one for EDS, but instead, to tell you how bad I am at predicting success stories. What I'm good at is predicting failures.

By John Cronin and Rachael Schwartz, ipCapital Group

Recent patent-related stories in the news suggest to the inexpert public a disturbing trend that some lucky inventor comes up with a simple concept, receives a valuable patent from a broken patent office and then easily earns hundreds of millions of dollars in licensing fees from industry leaders who cannot afford not to use the new technology themselves. From these stories, the public may start to recognize patents as a threat to industry, as they may force companies hoping to compete to license technologies at exorbitant costs. However, once one investigates the patents more deeply, it is clear that they do not threaten to shut down industries or disrupt the U.S. patent system.

On Monday at the NACHA Payments 2008 conference, I attended a session on decoupled debit aptly named "Decoupled Debit: Threat or Opportunity?" During the session, HSBC's Daniel Eckert, SVP, payments products, and Mike Grossman, CEO of Tempo, an alternative payments company, spoke to a packed room about what exactly decoupled debit is and what it means for banks.

First, a few definitions for the sake of context clarity -- A “solution” is any brand-name system offered as an in-house system or outsource service, and driven by the owner of the system, or a third party. The group of 32 vendors includes any company that has customers that rely on that company to keep their core system running, but all 32 vendors may not be in the business of selling their system to the entire U.S. population of Financial Institutions (FIs). Thus the reason for the “maybe” in the title. The distinction of selling core systems to any FI in the world applies to about a dozen companies.

Once upon a time, the only thing green in banking was the cash. Now the financial industry has hopped aboard the Green Express – with mixed results. The newly-released 2008 IBT Market Pulse Survey has attempted to identify and measure the types and amounts of greenness in the banking sector. So how is that working out?

First, I want to be clear about the word "outsourcing" because many writers today use the word to mean "offshore contracting." In this bank technology context, outsourcing has nothing to do with geography. I'm talking about the banking industry in the U.S. where outsourcing was known, 45 years ago, as "service bureau" or "third party processing" or even "correspondent banking." The outsourcing word was adopted as a modern word in 1989 as a result of the IBM/Kodak deal.

As discussed in my earlier blog on patents, the courts and Patent & Trademark Office have been struggling with how to define whether something that is a business method is patentable material. Some feel that business methods are intangible and should not be eligible for patents, unlike a traditional hardware-based patent. Many of the patent attorneys I've spoke with say that the U.S. patent system wasn't designed to keep up with new technologies, such as software and business processes, and that is why we are seeing so many problems around these kinds of patents.

At a recent Web 2.0 panel discussion held in New York (courtesy of Celent), the concept of “rich user experience” dominated the discussion. Danny Peltz from Wells Fargo confessed that his bank’s rather cool Stagecoach Island website, complete with avatars, was begun on a bet. But is this the rich experience bank customers really want from their financial institution? A good-natured but pointed exchange followed from the panelists.

In 1983, I published a set of guidelines designed to protect data (aka electronic money) as gazillions of bytes traveled through copper and chips. Ah, those were the good old days. I was confident I had every threat pinned down to 39 rules. At the time, 39 was about 30 more than the ordinary CIO had identified, and what was worse was most CIOs weren't even worried about any breaches because they relied on one pervasive safety net called "It won't happen to us."

By Wayne Meikle, Financial Services Director, IONA Technologies

People tend to equate ISO20022/UNIFI directly with XML. The benefits are a global set of common standards based on more open and cost-effective XML technology platforms—so life gets easier, doesn't it?

If you're a risk professional, you're in luck. According to the fourth annual Professional Compensation Survey by risk management executive search firm Risk Talent Associates (RTA), today's risk professionals are taking home heftier paychecks. The study looked primarily at risk pros in the capital markets space and found that average total compensation increased by 7 percent in 2007 over 2006, with an 8 percent compound average growth rate (CAGR) since 2003. The survey notes that compensation for managers specializing in market risk or credit risk is almost equal, and only slightly less than compensation for those focused on enterprise risk.

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