The Sweet Spot of Banking -- 1,208 Mid-Tier Commercial Banks
Seventy-five percent of what you read here is pretty objective. Twenty-five percent is subjective. These banks are my bread and butter. They hire me to help them make the transition from an old core system to a new and better one that suits their strategic plan. Not the small banks; not the large banks. So anything I report here is mostly from "been-there-done-that" exposure. If my clients do not conform to any third-party template, then that's what makes them successful.
I didn't have to conduct a survey of 1,200 banks to figure out how mid-tier banks view technology. What follows is a characterization based on a few of my in-your-face experiences.
- These CEOs have the power to manage. They don't want the power to dictate. IT decisions are consensus decisions.
- CEOs are really involved in major IT projects. Even when they are not visible to me, it's clear that when I return to the tasks of the project, I discover that things were happening behind my back. Banks want a specialist's expertise and objective views, but they don't blindly buy into the recommendations of any outsider. They have to understand them and they have to believe in them.
- Three other executives are critical in core selection -- CFO, CIO and head of operations. Unfortunately, chief marketing officer has yet to rise to the occasion even after I try to drag them into the fray.
- These banks want technology to work for their customers, employee productivity and for internal efficiency. They don't have to be sold on technology. And they are ready to listen to better approaches than what they are using.
- Major projects require a business case backup. When it comes to customer-directed needs, however, the order is, "Let's just do it, business case not required."
- In most cases, these banks set the pace independently. There has never been a case where I was hired because a competitor did something innovative.
- User departments are respected highly, because they are typically very competent and looking out for the banks' customers. Every user department is involved in the core selection process. That's why my process includes 35 people from the ground up.
- While every bank wants to pay a fair price for technology, these banks distinguish themselves by placing value ahead of cost. Small banks decide based on the lowest price. Large banks overspend, not because they don't know how to negotiate, but because they buy one-of-a-kind solutions. A packaged vendor solution never looks the same after it is installed in a large bank.
- These banks know how to work with consultants. They want proof delivered with every recommendation. I use 36 tools to identify the "best" core system fit for each bank. I use them all and they study them all. In the end, the bankers make the choice.
- People who work at these banks have their own ideas, and they won't be influenced by a czar, internal or external. Five hours after my first day on the job, I know the politics, each person's choice, and how they intend to play me. Five months after my first day on the job, we all come out of the final meeting with 100% agreement, total respect for all, and ready for a grueling implementation project, sans moi.
Talk about independence and marching to their own drummer. For the last five mid-tier banks I have consulted with, five different core systems were chosen. That just proves my characterization of the group. They think for themselves; they know what they want; they make decisions based on careful analysis; and they play by the rules of the regulatory agencies. They're not perfect, mind you, but they are the ones small banks aspire to become and large banks put on their target list to acquire. Not being on either list just means they are winners with a future to enjoy it.
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