09:38 AM
In my opinion, bank tech solutions are priced too low
By Art Gillis
The other night, I flew home from Boston to Dallas on what was a very nice flight. It left on time. It arrived on time. A Tasmanian Devil didn't sit next to me. In fact, I could have had several rows to myself. I didn't eat anything. And the PA system must have been out of order, or maybe it just didn't blow me out of my seat. I even managed a couple of cat naps. It reminded me a little of my no-nonsense trips from SAC Hq. to Vandenberg Air Force Base in the fifties. SAC didn't charge me a penny for 1,500 miles of travel because I was an "employee." Today, I have no allegiance to American Airlines except that I live in their city, and yet they charged me a mere $115 for 1,700 miles of travel. They even threw in a free ginger ale. That's why I believe the airlines are going broke. I see the same thing happening with bank tech vendors if they don't wake up and charge more for their tech solutions.
Whether a bank chooses an in-house system or outsourcing, they're getting a real bargain. Here's just one example. A bank that chooses to go in-house pays a one-time license fee for software. Then it agrees to pay 15 percent to 20 percent of the license fee annually forever. Even after 30 years, a bank can run on its updated system thanks to three-times-a-year software releases, and never has to go through another conversion. Bill Gates wouldn't be the richest man in the world if he had used that pricing scheme for MS-DOS. I think the cheap lunch idea should end. Bank tech vendors should put a time cap on their solutions, like there's a new pricing paradigm every 10 years, or they should sunset their systems and start over every 10 years. Or maybe I'm just overreacting to the sweet deal banks are getting because it's time for me to trade in my 13-year-old Jaguar for a new one, and there goes my budget. I wish it were like software from a bank tech vendor.