Small Bank Tech Companies Pack a Strong Wallop

There are 60 bank tech companies in Automation in Banking - 2008; 32 percent of them are small companies (six to 52 employees). The criteria used for entry (all companies) were subjective: • Some were included because they are ubiquitous. Five company names appear somewhere in the total Financial Institutions population of the U.S. • Some were included because they offered a specialized product or service that's in demand. • Some were included because their category was defined as "every....." For example, every core outsource company and every core software company. • Some were included because they were in my first book, Microcomputers in Financial Institutions, 1985, Dow Jones-Irwin. How's that for subjective? • Size of company was never a consideration.

This is not intended to be a sales pitch for small companies. Instead, it's designed to balance the scale.I realized that 96.3 percent of my blogs cover matters that large bank tech companies are involved in. For example, last week's blog was about mergers and acquisitions. The 19 small companies do not have a single M&A transaction in their history.

The 19 companies represent the following applications services:

Core Software/Outsourcing: 6 File Conversions: 3 Cash Management: 2 Mortgage Lending: 2 Asset/Liability Management: 1 Check Imaging: 1 Document Imaging: 1 Marketing Services: 1 Platform Automation: 1 Collections: 1

In fairness, the large companies do everything these guys do, and it's safe to say no company has a lock on any banking application, and I've never heard a salesman say, "We are the only bank tech company that..." unless it was to say "...is located in Laurel, Mont."

Some common characteristics of the group include:

• Sustenance-these are not startups or wannabes. Some of them have been around forever. • Privately owned, and because I know most of them, enjoying their independence and freedom from reporting burdens. • Successful, as defined by the owners. I would add, "Happy to go to work every day." • Competence that is proven-one company has 8,000 customers, including 9 of the top 10 U.S. banks.

If there is a sales pitch to any banker in this blog, it would be, "Whenever you see the words 'small company', take a moment to read further. There might just be a very large amount of competence in delivery."

DISCLAIMER: None of the 60 companies asked to be in this report. I invited them.