“Never mistake endurance for hospitality.”
I’m going to push your hospitality this week, GonzoMongers. We’re seeing more and more deals come across our desks from banks and credit unions looking for core processing alternatives. Time to tell you what we’ve been hearing…
At GonzoBanker we have been heavy on the mic regarding the importance of vendors having an interesting secondary/ancillary product story to tell. This is because, given a baseline of minimum core functionality, ancillary systems continue to be the most hotly debated topic during a system selection. No one argues over superior consumer loan repayment term flexibility, but watch the sparks fly if you try to slip a clunky branch automation system past the retail head.
Core functionality gets vendors into the dance; ancillary systems ice the deal.
It’s very simple. Vendors that win deals can electrify the business lines by providing appealing stories for ancillary systems, whether they are the vendors’ own products or well-constructed partnerships. Of course it’s not really that simple, but the vendors with the most momentum in the mid-sized market ($1 – $10 billion) can deliver strong ancillary functionality and/or tight integration.
“But not all ancillaries are created equal,” a wise consultant once said, and truer words have never been spoken. Some ancillary systems do, indeed, carry more weight than others with our bank clients. I’ll break them into five categories:
THE DEAL KILLERS
These are ancillary systems that have a significant influence on the core selection outcome. The vendor that stumbles here is sent back home, shooting the consultant and the bank the serious stink-eye:
THE PRIMA DONNAS
These are systems that, depending on a bank’s actual, perceived or planned niche, are vitally important to the bank. As a result, the niched, mid-sized banks tend to go best-of-breed here. The importance for these banks is in finding a core vendor that is not only capable of integrating with established systems, but also willing to do so and at a reasonable price. Notoriously egregious fees for interfacing, professional services and transactions from the core vendor to integrate with these third-party systems can easily cause our client banks to eliminate a core vendor from the hunt:
THE AL GORES
This category is devoted to systems that are important to the bank but do not individually carry enough weight to be considered Deal Killers. Cumulatively, they make a difference, but as stand-alones they do not tend to sway the bank’s decision much:
THE DON’T GO THERES
These are the ancillary systems that are often offered by the core vendor, but mid-sized banks tend to look elsewhere when making buying decisions:
In a fit of lyrical genius, Mick Jagger and Keith Richards wrote that “You can’t always get what you want, but if you try sometime, you just might find you get what you need.” And so it goes with these ancillary systems. They may be important, but no one has the gall to protest if they do not get the brand they want. Sometimes it is because the system truly is inconsequential in the grand scheme of things; other times it’s because that system’s users do not carry the political clout to sway the decision. In most cases, these systems default to the core provider. These are the Also-Rans:
No hard-hitting themes, precious little soap-boxing, and even less (as in nil) vendor bashing this week, GonzoMongers. But fret not, loyal Readers, I still harbor much more anger than my easy life merits. More bile and misdirected aggression next month.