Bankers hate it when good software they depend on starts to grow old and fall apart. As enhancements become non-existent, releases become less reliable, and user manuals bear little resemblance to the system being used, bankers often reminisce: “All the good people at that company have left. It was so much better when [insert name] was running the show.”
Developing software is part science, part art and part zen spirituality. We tend to forget the deep and necessary connection between software and the people who develop it. To illustrate this point, let me share a story that symbolizes what often happens in our industry:
Bruce the Banker has become frustrated with a particular lending process at the Van De Lay Bank and Trust. One night over beers, he shares his frustration with Peter, his college buddy and computer programmer. With the beer flowing, Bruce the Banker and Peter the Programmer decide to go into business together and develop a new loan software application.
Backed by Bruce’s deep knowledge of lending and Peter’s skill with next generation programming tools, the new product, known as WhizBang, catches the attention of a few innovative banks. These banks agree to “crash test dummy” the product and soon have working installations. As word of the new product spreads, crowds pack around the WhizBang booth at the BAI Retail Delivery Conference and the orders start popping.
Within five years, this software dreamed up over beers has become a mainstream success with 180 bank installs. Revenues exceed $20 million for the company and, suddenly, Bruce and Peter are more attractive to members of the opposite sex.
Before long, acquisition offers begin to pour in from big companies like SiFerv, I&M, and TellAll. The offering price is too good to be true, and Bruce and Peter sail off into the sunset with non-competes and no worries.
From there, the large acquiring company begins to “manage” the small upstart. In the transition, the original programmers start to leave. New programmers with no knowledge of WhizBang come on board. These folks typically view the application with indifference or criticism (“I never would have written it this way.”). Sales of the product plateau, cost cutting procedures are implemented, and customers begin to notice a change. And that, GonzoBankers, is when I hear the laments: “Things were a lot better when Bruce and Peter were running the show.”
I don’t want to get too spiritual here, but I believe great software has a soul. Great software is developed and stays alive when smart, ego-driven owners are leading the charge. It has a soul when the developer eagerly listens to customers because he takes personally any criticism of his product – the piece of art he created with his own sweat and blood.
Think about Internet banking. In the mid 1990s, major players such as EDS, IBM, and H&R Block had the resources and expertise to dominate this emerging new technology market. Instead, two young turks, Paul Fiore and Daniel Jacoby, birthed Digital Insight, an upstart that is now the most profitable of the remaining Internet players.
Most great software is developed not in the assembly lines of a large corporation but by entrepreneurs who have a deep knowledge of a particular problem or opportunity in an industry. Slinging code for a salary does not elicit the passion and pride of authorship that helps to create something unique.
Consider all the examples in banking of techies and entrepreneurs who brought great products to our industry:
The list goes on and on. While the team at Cornerstone loves to bicker with these vendors as with any industry players, we recognize that these folks have helped change our industry. Their success is exemplified by that fact that they have become somewhat synonymous with the products and companies they helped create. I hope our industry continues to experience the “creative destruction” that keeps spurring on companies like the ones listed above.
I also hope that the big technology providers do everything possible to retain people like these when they are acquired and try to emulate, as much as possible, the entrepreneurial model of software development. Why not create better incentive structures for programmers and product developers? Let them own a share of the product revenues or even a “phantom stock” in the product that vests over time and can be redeemed when they leave the company. In recognition of the ego we all have, why don’t vendors promote and celebrate their product developers and programmers more often? Let them feel like their artistic efforts are being noticed.
While the team at Cornerstone are stalwarts for vendor due diligence, I hope our industry does not become overly conservative in selecting technology providers. New vendor management regulations, inspired by GLBA, run the risk of making us all wimps. You’ve probably been reading regulatory guidelines like these lately:
These are all prudent guidelines that banks follow conservatively most of the time. However, if every bank decides to only choose the most established and “safest” vendors in the industry, we may kill the entrepreneurial model that helps us continually reinvent ourselves with technology. We risk being left with software that has no soul. We also risk finding ourselves left in an industry that is less dynamic, less interesting, and maybe less successful.
So GonzoBankers, let’s not turn into technocrats who think great new technology products just magically appear. Let’s continue to support and recognize the bright techies and entrepreneurs who bring new products to market. Finally, let’s keep pushing our larger technology providers to keep an entrepreneurial edge and take good care of the code-slingers.
“At the root and origin of all great empires of industry can usually be found a perspiring entrepreneur, often frustrated and fatigued, struggling over a machine that won’t quite work.”
– George Gilder, Recapturing the Spirit of Enterprise