Ah, spring: a time for longer days, new flowers, budding trees – and new leadership. At least for bank system providers.
Metavante recently announced that Frank Martire, formerly of Fiserv, will take the helm from Joe Delgadillo. This announcement comes almost a year to the day since the news last spring that Paul Bourke would replace Ray Maturi, Aurum Technologies’s first CEO.
Each new CEO is a seasoned core system executive who will leave his mark on his new company. I would like to speculate here on just what the impact will be.
Whatcha gonna do, Paul?
Aurum Technologies was formed with a management buyout of EDS’s banking group. Venture capitalists provided financing for the deal that included four product/services: BMIS, MISER, ITI service bureau, and the EDS item processing service.
Ray Maturi and a group of former EDS executives engineered the separation from the parent company. Ray’s initial challenge was to shore up the systems functionality and stop customer flight to other solutions. After EDS’s lengthy period of minimal investment in the products, Aurum was seen as a solution to the years of neglect.
Aurum today has invested heavily in the two core products, built a real kick-butt image-based item processing business, and purchased two small core system products. And now the reins have been turned over to Paul Bourke. To gain a perspective on what Paul may do, we must examine his history at BISYS.
I met Paul eight years ago at a BISYS systems presentation to a mid-western thrift. Paul was present to help assure BISYS would continue as the core processor. I had the opportunity to discuss with Paul his plans for continued growth at BISYS, where his tenure was marked by substantial financial growth fueled by the acquisition of non-core businesses.
My guess is the venture capitalists have given Paul marching orders to grow revenue and take Aurum public. Given his history, here is my Gonzo prediction on his direction:
First, supporting multiple core systems is very expensive. Aurum is now maintaining four very different products. It makes sense to build the business around two distinct market segments: a low-cost “bank in a box” solution for small community banks, and a mid-size bank product for thrifts, commercial banks and large credit unions. Banks running the other products will be slowly transitioned to the appropriate system as their systems are sunsetted. These two businesses will likely grow slowly and will largely be used to fund non-core growth initiatives.
I don’t expect core system solutions will be the growth engine envisioned by Aurum’s VCs. Perhaps Aurum will follow the blueprint of BISYS, i.e., identify a niche bank-related service or product and acquire companies providing it. Security, privacy, CRM? New revenue, profits and a successful IPO will be the measure of success.
What’ll it be, Frank?
Joe Delgadillo and his IBM-trained team turned small bank service bureau M&I Data Services into billion-dollar Metavante. Along the way Metavante built or acquired products and services that spanned the entire breadth of bank technology needs. The Gonzo Gang has always recognized the excellent service reputation and conversion skills consistently demonstrated by the group from Brown Deer. On the other hand, we have been critical of the company’s pricing, bureaucratic processes, complex matrix management structure, and resistance to integrating third party products into its core offering.
Frank Martire joined the Fiserv organization when he and the CBS product line were acquired in 1983. He was the CBS business unit president for a number of years and ultimately was the senior executive responsible for all of the non-Unisys based products within Fiserv. Frank left Fiserv two years ago to “pursue other business interests.” He joined Metavante in January 2003, and we at Gonzo waited patiently for a corporate announcement regarding his role. We, like many, were surprised when it was announced that he would replace Joe Delgadillo.
My guess is that Frank’s marching orders are not too different from Paul’s, i.e., grow revenue and profitability and get the IPO completed. His to-do list for Metavante, however, is not at all like Paul’s and will require a very different approach. Of course, Gonzo is not afraid to take a best guess at Metavante’s future.
I believe Fiserv is a great teacher and its impact is long lived. Therefore, one of the high priority challenges facing Frank is to put Metavante on a dollar diet requiring every business unit to meet specific financial hurdles. Look for low value or no value initiatives to be discontinued.
Next will be a cultural makeover that will see the demise of the “Metavante Way” and the birth of listening to customers and doing business their way. Reshaping the core of how Metavante has historically conducted business will be far more challenging than a little budget reshaping, and change will come slowly. Communication channels will open up and banks will be asked how they want to do business. This is a novel idea whose time is long overdue. No longer will Metavante customers wait for the “Mother Bank” to determine new functionality that is eventually passed down to the remaining customers.
Then will come a simplification of the matrixed management structure. It is simply too difficult to determine who is responsible for anything at Metavante. My best guess is Frank will require ownership of every aspect of the business. This leaves no room for stinking organizational spaghetti.
Finally, I think Frank will take a hard look at how the pricing model is constructed. The complexity of the current model has long been a sore spot for most bank customers, and everyone will welcome a simplification.
This is the time for Paul and Frank to step forward and really make a difference in an industry that is eagerly awaiting innovative change. Good luck, gentlemen. We all wish you success.
(By the way, if you like our thoughts, let us know – we will send you a bill for our services.)
–caf