It’s the weekend before Christmas, GonzoMongers, and the team at Cornerstone Advisors, Inc. is about to head out the door for our big corporate blowout. However, we know that no holiday season would be complete without the infamous annual Gonzo Awards.
It’s been a weird year in banking. The technology buzz was fairly tame, the economy bumped down and then up, and bankers mostly went about their ways of making loans, taking deposits and making money – about $120 billion of it! During this time, the Cornerstone team was on the road enjoying snowed-in airports, canceled flights and stale doughnuts at the free breakfast buffets of hotels around the country. Down in the trenches with our financial clients and vendors, we found plenty of fodder for this year’s awards.
So, once again, pull up an eggnog and sip on your chair as you enjoy this year’s GONZO AWARDS.
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The banking industry had many notable occurrences during 2003:
Bank of America buys Fleet. Northeastern banks with a commercial/small business focus are shining up their riefcases for some serious market-share-stealing sales calls next year. These type of large bank acquisitions are often dubbed “the gift that keeps on giving.”
Hiring a bunch of commercial loan officers to grow metro “Business Banking Centers.”
Close 2nd : Selling rural branches to local community banks.
Gallup ‘s “Q12” Management. This latest management fad, which asks 12 key questions about workplace satisfaction, had crusty old bankers pondering if they had “a best friend at work.” Everywhere we go, the “best friend” question is getting the lowest scores – seems like a group hug is needed here.
Bankers.
Sarbanes-Oxley 404. Gee, another opportunity in banking to document our internal controls – what a novel idea. Any lobotomized person want to volunteer to lead this project?
Basel II. While bankers talked last year about “preparing” for this elusive regulation, all that happened was that a bloated international group of wonks held a lot of committee meetings.
Large bankers helping to facilitate late trading and market timing schemes by hedge funds. Why is it that every time banks get “sophisticated,” they also embrace situational ethics?
Laid-off mortgage loan processors. Try these folks in other positions around the bank. They are used to being REAL busy!
The Starbucks Duetto Credit Card. Forget waiting three years to get restrictions and blackout dates for bogus airline miles programs. Starbucks has introduced the rewards card for the mass market: use this credit card a lot and you build up stored value for free coffee. We are predicting a mongo success here. Banks beware.
Credit unions entering the commercial services arena. There will be some focused players who take the business niche seriously, but many will only dabble and, as a result, fail.
Free bill payment. This is an idea that is so good for the consumer and the banks (think long-term here, folks) that it simply must work. Already, the mega-banks’ offering of free bill payment is trickling down and pressuring mid-size and community banks to get on the bandwagon. This move might have to be in your 2005 budgets.
“We hired a new sales trainer.”
“We’re getting everybody on the same version of Windows and Office.”
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Full Disclosure: The Cornerstone team has stumbled across too many great bankers to talk about in one cheesy newsletter, but we would like to recognize a few who made things interesting this year:
Manny Mehos, CEO of Coastal Bancshares, Houston, TX . Manny and the gang at Coastal recently sold to help fuel Hibernia’s march into Texas . We hope to see this brilliant yet humble CEO back in action again.
Silicon Valley Bancshares. With the stock up almost 100% this year, it’s nice to see one of the industry’s more creative banks back on solid ground again – non-performing loans are now at a 10-year low!
Ralph Marcuccilli – Star Financial Bank, Fort Wayne, IN. Fed up with the rising costs of outsourced bill pay processing, Ralphie Boy from Indiana has teamed up with check production firm ACOM Solutions to create an in-house bill payment capability. Ralph reports that customer service and research is a breeze in this new environment.
S&T Bank. David Ruddock and the team at S&T have put together some intranet stuff that was so cool, the bank’s core vendor, Metavante, signed up to help market it to other banks.
Bill Cooper, CEO of TCF, Wayzata, MN. Bill has demanded respect this year from credit card giant Visa. After being told of “exit” fees if TCF left Visa, Cooper led the charge to file a lawsuit against the card behemoth. Fortunately, it all ended up in a nice 10-year renegotiation with Visa.
MidFirst Bank, Tulsa, OK . This group, led by CIO Dave Westman, has leveraged the HEAT help desk platform to the hilt and done a heck of a job with online satisfaction surveys and tracking. Nice to see an IS team focused so highly on measuring service quality.
Bankstocks.com’s Tom Brown continues to win our accolades for his no-BS commentary on the banking industry. Recent pieces on the BofA/Fleet deal and dubious “Fairness Opinions” prove that Tom still has the touch.
Jeff Meyers, Associated Banc-corp, Stevens Point, WI . Young Mr. Meyers has done a yeoman’s job supporting Associated’s growing consumer loan portfolio without growing staff. He laid out some benchmarks that blew the Cornerstone folks away. A rising star to watch.
San Antonio Federal Credit Union, San Antonio, TX . SACU has built an automated process for indirect auto loans that can originate, score, underwrite, approve, document and board an auto loan with no staff intervention. The very efficient process required integration of multiple vendor products. SACU’s current indirect loan portfolio represents a significant portion of total loans outstanding.
Sterling Bancshares, Houston, TX . Chief Operations Officer Glenn Rust has helped spearhead some of the most disciplined process quality and efficiency measures that the team at Cornerstone has seen. Bravo to the team at Sterling for measuring what you manage.
Royal Credit Union has quietly built a commercial lending powerhouse in Eau Claire, WI. With $157 million in business loans on total assets of $615 million and zero fancy technology, Royal is a credit union that can teach many a thrift and community bank how to use guts, guile and Excel alone to build an impressive commercial portfolio.
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Check truncation. Whether it’s in the back office, at the teller line, the lockbox, the ATM or the merchant, truncation is hotter than Paris Hilton after a case of Red Bulls and Vodka.
Multi-channel integration. This year, our industry moved from the term CRM to multi-channel integration, but still pretty much stayed in the “PowerPoint” stage of development. Forget the visionary techie talk, this is a long-term battle for integration that will be won or lost in the trenches.
Stand-alone CRM systems that track sales/service events and marketing programs.
Systems that automate workflow and tasks in branch, loan, call center, and other delivery systems.
Integrating stand-alone CRM systems with workflow systems.
Automated sales tracking and reporting with an interface to incentive payroll applications. (This is the third year running this gets an award – yet, in our foolish way, we still dream.)
CoreTrac. These guys in Austin, TX , are a fairly new face and have a small client list. But we’ve seen their stuff, and it looks like they’re moving in the right direction. Keep an eye on this group full of former Q-UP talent.
Cisco, San Jose, CA, for Voice Over IP (VoIP). It seems Cisco’s lead in digital networking is trumping the ol’ telcos hands down these days.
Crazy Internet stock valuations. Amazon now worth $21 billion.Yahoo trading at 126 times earnings. eBay trading at early 2000 levels. When will we learn?
From MSN.com – # of hits from querying:
“Bank” = 1,300
“Autoerotic asphyxiation” = 1,343
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Our esteemed vendor community was very busy this year, and Cornerstone found plenty of companies, people and events well deserving of the Gonzo spotlight:
We have to give this one to a new player: Fidelity National Financial entered the business with the acquisition of ALLTEL Information Services (renamed Fidelity Information Services), as well as two great ancillary system acquisitions: Hamilton & Sullivan, Ltd. (cash management) and WebTone Technologies (retail delivery). These acquisitions address key weaknesses in the former ALLTEL’s product line. Here’s to a strong and vibrant FIS competing for our clients’ business in the years ahead!
Fiserv CBS. These guys won many big deals this year, leveraging the ever-reducing cost of the iSeries. Nice to see the CBS team back strong in the market.
Digital Insight purchases Magnet. This pickup proves that DI wants to deliver for the banking industry’s high-end cash management appetite. The move also provides better corporate financial resources behind the Magnet product.
Mortgagebot.com and Baker Hill’s Bank2Business. These two Web-based loan application/decisioning ASPs are more than ready for prime time. With hundreds of installs and added functionality, these applications are proving that the Web and e-commerce wasn’t all smoke.
Fiserv’s Information Technology unit (ITI) for moving its core system products to the IBM iSeries (a.k.a. IBM AS/400) computer. ITI has only been available on the Unisys platform since its introduction into the market. This move will open new markets for ITI, particularly with CIOs who are partial to the iSeries platform. Great move!
This Mongo Gonzo Award goes to the team at COCC (formerly known as Connecticut Online) for completing the migration of its entire client base from a cobweb-filled NCR mainframe application to the Oracle-based Open Solutions platform. The team at Cornerstone has never witnessed the successful wholesale migration of such a large (80+) client base in only a few short years. A free round of drinks to Rich Leone, Joe Trafton, Steve Kayser and all the gang in Avon, CT. Amazing job!
Jim Kern, OSI. Good to see a rock solid dude back in the bank tech game.
Tom Shen, S1. The founder of the former Software Dynamics Inc. (SDI) has moved on to more meaningful things than branch software – but everyone will miss Tom’s passion for code and personal demeanor with everyone he met. A real class act that the folks at Cornerstone wish all the best.
Dave Krystowiak (formerly of Fiserv VISION) – a straight shooter with a sincere willingness to help clients. Here’s hoping that our paths cross soon.
qbt Solutions. This small company has amassed a growing financial client base and vendor alliances amidst the big middleware players – and the price is right, too. Could be a real player to watch in bank tech.
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When your butt is parked on the seat as many times as ours were, you hear some gems. The 2003 crop did not disappoint:
The WebEx Demo – WebEx is a technology that should work, would be very cool if it indeed did work; everyone wants it to work, but it falls flat on its anonymous user interface nearly every time. Despite the fact that WebEx demos reduce travel and can simplify logistics, they are at best ineffective and at worst as annoying as your eight-year-old brother. Nine of 10 WebEx demos begin with technical difficulties and graduate to more formal log-in problems, screen resolution conflicts and out-of-synch presentations. Mix in the trouble with asking questions of the presenter due to poor sound quality and the inability of the presenter to read body language, and the yawns start a good 80% earlier than they do for an in-person show.
That would be Aurum’s use of an Elvis impersonator at its presentation to Jackson Federal Bank in Brea, CA. Yes, Aurum won that deal. No, the 20-something Elvis impersonator was not promoted to head of marketing.
ULTRADATA’s team led by Kim Houck, Jim Kreps and Tim Kelly wins this award hands down. Can’t say the name of the credit union, but ULTRADATA brought with it product knowledge – product managers, marketing managers, development and customer service talent, etc. – that was so deep there was almost no need to write a follow-up list. The team was crisp, prepared and impressive. Time will tell if it paid off.
Though we mean this quote as a compliment, it’ll remain anonymous as we don’t know that the award recipient would agree:
“You know how that one customer calls in and goes, ‘My gosh! How can you send me that past due notice? I’ve been paying on time all along!!’ And so you pull up online history, and you’re like, ‘OK, sure, whatever! We’ll just see about that Miss Fancy Pants. Uh-oh, looks like you have five delinquent payments, young lady.'”
When asked if a system could perform a certain function, the presenter replied, “I know it can, because the programmers told me it can do anything.”
When asked if a report writing system was easy and intuitive, the presenter offered, “Yes, as long as you have a programmer on staff.”
The sales representative of the software company started the day by pronouncing, “We could demo the system all day, but we have found that things work out much better if we just talk about it.”
When a bank employee asked if a system was Windows- or browser-based, she was told, “That’s really your responsibility to decide.”
At a conference presentation, a consultant (of the non-Gonzo variety) started his remarks by claiming that his company had a 100% satisfaction record with clients. When asked by someone in the audience exactly how he knew that, he replied, “Because they hardly ever call us back.”
We’ll keep this one anonymous but here’s the exact quote: “Remember, like, when [Cindy] or whoever was showing you that loan on that SUV or whatever earlier today? Well, we can do the full origination and servicing and everything and stuff for that loan. Full boat, true blown – you know? Whole nine yards and stuff like that.”
That, Fair Readers, would be this year’s Cornerstone Report . For reasons too numerous and heart-wrenching to describe, this year’s Cornerstone Report: Benchmarks and Best Practices for Mid-Size Banks is well past its promised delivery date(s), and for that, We Are Sorry . But, we’re back on track and within a couple of weeks of delivery. We can promise you, however, that the upcoming report, like a mind-scrambling batch of slow-distilled Mississippi moonshine, will be very, very well worth the wait. The Cornerstone Report is chock full o’ otherwise un-findable productivity and efficiency benchmarks for all facets of mid-size banks, all wrapped in a fine layer of Cornerstone’s now-famous spin. One read, and you’ll forget that pesky waiting period. We swear.
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Okay GonzoMongers, let’s see how the GonzoBankers’ wild predictions faired this year. looks like we need to sharpen our crystal balls.
#1: One of the top five core vendors will be acquired by one of the others in 2003. (Terence Roche)
Update: Well, ALLTEL Information Services was acquired, just not by one of its competitors. Fiserv acquired the remains of the EDS business – it’s good! However, this was a pretty easy one to guess.
#2: Of these four major players in the retail Internet banking market – Corillian, Digital Insight, S1 and Online Resources – only two will be independent by year-end 2003. (Scott Hodgins)
Update: Sssssssswing-and-a-miss
#3: Microsoft Office 11 will fall on its face, and StarOffice will gain a footing as a result. (Carl Faulkner)
Update: Unable to research this as hard drive was immediately reformatted upon querying “StarOffice” from msn.com search engine. Uh. we’re happy to report that Carl stopped visiting the cough medicine cabinet shortly after this prediction was made.
#4: Due to heightened attention from consumer action groups, some states will begin to regulate bank overdraft fees and “privilege” activity. Bank regulators will require more “fair fee” type reporting, similar to the Fair Lending regulations implemented in the past. (Steve Williams)
Update: Right Prediction, wrong year.
#5: Jerry Garcia will be found gorging on rib tips at a Red Lion restaurant in Reno , NV . The Grateful Dead will reunite and play at the BAI Retail Delivery conference, which will report record attendance. Is it getting smoky in here? (Scott Sommer)
Update: Close, but Jerry opted for the pulled pork.
#1: Total check volumes will reduce 15% in 12 months due to the combination of Check 21, check-to-ACH conversion, and debit card transaction growth (Terence Roche)
#2: Linux moves to banking. The cute little penguin will make inroads into banking as a strategy to reduce reliance and cost of Microsoft products. Look for print and file servers to be the first thrust of this movement. Look out Microsoft, banking CIOs are tired of paying for software that is the primary target for hackers and malcontents. (Carl Faulkner)
#3: Fueled by the BofA/Fleet deal, regional bank M&A activity will get very hot in 2004. The main beneficiaries will be mid-size/community banks, who will achieve their best commercial loan growth in five years. (Steve Williams)
#4: Mentored and inspired by former Iraqi Minister of Information Muhammed Saeed al-Sahaf, proponents of the branchless bank, teller-less branch, multipurpose ATM and wireless banking will band together in an appropriately named “Believing Our Own BS” self-help society. (Scott Hodgins)
#5: Misys, SAP and i-flex will make a big push to penetrate the U.S. banking market, probably having to buy their first customers with well-below-market core system pricing. (Scott Sommer)
#6: Banks will continue to sink money into enterprise-wide CRM-like initiatives but (despite the press releases you may read) the Holy Grail will remain a mystery. (Tripp Johnson)
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“Goodbye Yellow Brick Road,” Elton John (Carl Faulkner)
“Born to Run,” Bruce “the Boss” Springsteen (Steve Williams)
“Pet Sounds,” Beach Boys (Terence Roche)
“Aja,” Steely Dan (Scott Sommer)
“Aenima,” Tool (Scott Hodgins)
“Moving Pictures,” Rush (Tripp Johnson)
Any of the 4,000 Rod Stewart Greatest Hits Collections (Bonnie Adams)
“Led Zeppelin IV,” Led Zeppelin (a tie: Linette Harris, and Larry Young, creator of the Jolly Terence [GonzoBanker logo])
“I know ‘best’ is, like, totally subjective, but how could two out of 9 otherwise sane and rational people pick Led Zeppelin???” (Cate Pitts)
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The team at Cornerstone Advisors continues to thoroughly enjoy bringing you our weekly Gonzo spin. GonzoBanker now reaches more than 5,000 subscribers throughout the United States and internationally in places like England , Australia , Germany , Hong Kong , India and Dubai . Your compliments, feedback, commentary and complaints have helped make our ongoing dialogue about the future of banking a true team effort. We would like to throw out a special thanks to our clients and partners who have helped make this Cornerstone’s most successful year.
Here’s to health, happiness and peace this holiday season.
The Gonzo Team