Enhancing The Blog

Last week's blog about large bank vs. small bank technology produced exceptionally good and meaningful feedback. I believe the three respondents added new dimensions to my message, and thus I want to make sure everyone sees the wisdom of the three gentlemen who commented.

One reader agreed with the blog, but only as it related to core apps. That's how I intended the message. Correctly so, the reader pointed out that big banks are way ahead of smaller banks when it comes to customer-facing technologies. He also concludes that smaller banks have not yet utilized the Internet to its full capacity. Points well made. I might even go a little further to say that small banks view their technology more like a factory. It produces products (updated files and reports) every day, but seldom do small banks analyze. The key term in the industry is "business intelligence." The factory creates all manner of information resulting from the daily posting and updating of accounts, but information sits in the databases like gold in an untapped vein. Big banks, on the other hand, have entire groups of analysts looking at data to figure out how the bank should develop marketing campaigns, price products, design new offerings, calculate product profitability, and sometimes, how to get rid of undesirable customers. You don't believe the last one?

My remarks about the two most popular core systems (JHA and ITI) triggered some reaction that clearly painted a different picture than the simple one I presented. I have no doubt that the remarks of this reader were sincere. His experience with the ITI system reflected real-world difficulties with the cost of proprietary interfaces, the now-you-see-it, now-you-don't SOA, standard third party interfaces that need to be tweaked or the vendor will write any interface for a tidy sum, and the perception of a database file structure that is nothing more than a flat file buried in ITI's proprietary COBOL. These comments come from a man who uses the ITI system as an outsource company. That makes company look more like a large bank. ITI's software serves at least a dozen such companies. I respect his remarks and would only offer this follow up. As a third party vendor, his company has legitimate challenges that make his job more costly and difficult. At least his outsource company didn't have to procure a bunch of independent core apps and "glue" them together. This story could go on and on, but I wonder what ITI has to say about it.

The third responder gave credence to the value of integration and the high risk of conversion for large banks. His contribution to the dilemma large banks face is to integrate customer and predictive analytics solutions using data sourced from the core to allow banks to develop targeted growth strategies and implement profit-based incentive programs. Hidden in his solution is, leave the existing core apps alone. I believe the large banks are taking his advise. Even though large banks are using very old systems, there hasn't been a wave of core conversions in the U.S.