“When it is not necessary to make a decision, it is necessary not to make a decision.”
– Lord Falkland
GonzoBanker staffers in our Arizona offices recently noticed an interesting if not surprising trend in our core system selection practice. In 1997 and 1998, the core system RFP process resulted in selection of the incumbent only 25% of the time.
Now, the incumbent wins a full 60% of the time. Here’s why:
BOTTOM LINE APPEAL
Incumbents are simply buying deals because new bank signings are becoming increasingly scarce. The bank technology market is softening, and reps are not meeting their sales goals. You notice the lack of new signing announcements in the trade rags. You can feel it in the extra edge of jaw-clenched geniality from the vendors. Eliminated vendors are making angry calls to banks bemoaning the naïve advice they received from their consultants. As new signings dwindle in number, vendors become even more ferocious in using price as an anchor to retain existing clients.
Few vendors are exerting significant effort on improvements to their core functionality. If an enhancement is not CRM-related or browser-enabled, it’s getting zero attention. To be fair, this is in direct response to the lusty CRM feeding frenzy created by banks. The differences between core products are blurring, and true CRM products from the core providers are still in beta or at best in very early deployment. With the hot items still so new and core products looking more and more alike, vendors are not providing banks with a compelling reason to leave their current providers. It’s not that the new alternatives couldn’t work for the bank; the vendors are simply failing to sell a story with a happy enough ending to merit the pain, suffering and expense that accompany a conversion.
THIS AIN’T MY FIRST RODEO, SON
Senior executives are growing cynical when their business lines blame lackluster performance on technology. CEOs have approved too many tech projects with dubious payoffs to buy into the idea that the retail group’s target revenue numbers are being missed only because of the lack of a GUI front end and predictive sales tools. They also know that no vendor has all of the answers or perfect service. So executives opt to live with the devil they know (and that they have learned to manage) over shacking up with the newcomer with the glossy brochures and the hidden warts. At the very least, senior managers are raising the hurdles that a new vendor must clear before the bank braves a conversion.
I once believed I’d keel over in painful brainpan torment before I gave Y2K another thought, but I find myself once again pulled back like a disinclined Corleone. Banks got through the Y2K fiasco relatively unharmed, but only thanks to hundreds of cumulative years of overtime from their staff and the vendor community. Now, 18 months after the bulk of the work is done, many banks have new, functioning, even thriving systems; staffs are trained; and efficiency is rising. With the enhanced systems operating as planned and the rancid taste of Y2K still in their mouths, bankers are much more inclined to harness what they have than to endure another massive technology project with questionable payoff.