Things are tough all over, GonzoBankers, and it’s seriously bringing me down. We have banks failing, GSEs on the verge of becoming – simply – GEs, and a consumer debt problem of epic proportions. The falsely “Aw-shucks” Brett Favre can’t breathe for another minute away from the spotlight, and NBA refs are fixing games. And let’s not even get into the guilt and wallet pain of us Americans needlessly driving SUVs.
It’s tempting to just hammer out a current events bitch session this week, I must admit, but no, my leaning in murky times is to go with what I know best.
So … … back to vendor gossip, folks! Let this serve as the best and worst goings-on at the major core vendors right now.
The best and worst of Fiserv remains Fiserv 2.0, a visionary, drastically needed change at Fiserv. The enormous wheels are starting to turn. Sales reps are becoming empowered to sell all core products. Some ancillary products that were once tied to a specific core system are now being offered across other core business units. The company has reorganized itself, poised to be more nimble. All very good stuff.
However, the problem with Fiserv 2.0 has been its iceberg pace in making noticeable changes from the client’s perspective. For example, Fiserv has taken the steps to reorg its credit union group into the CU7, but it still clearly has far too many CU core products – none of which has market momentum to be proud of, particularly in the large credit union market.
True, some ancillaries are now sold across multiple core platforms, but to say there is a definitive Fiserv product (or even two or three!) for a given application type would be a gross overstatement, Bubba. What is Fiserv’s loan origination product? What’s THE Fiserv banking branch automation product? My guess is that we easily could get four or five different answers depending on who we ask. Even after the CheckFree/Corillian acquisition, I don’t think Fiserv reps could say that Corillian is THE Internet banking product. There are way too many exceptions to that rule right now.
Fiserv is still not proactive at the executive level in working to retain problem clients. Fiserv has clients that it knows plan to leave a particular core platform, but we have not yet seen the new Fiserv acknowledge that fact early and make it smooth and financially rewarding for those clients to switch to a different Fiserv core.
To its clients, Fiserv still looks and feels and smells like Fiserv 1.0, so much so that even the company’s sales reps can’t suppress a quick giggle when you mention Fiserv 2.0.
For mid-size banks and large credit unions, Fidelity has taken some broad steps to fill out its suite of ancillary products. Fidelity is diligently working to leverage its investment in eFunds and Certegy, and the response has been quite positive. Fidelity is also gaining momentum in the hot remote deposit market. Heck, the company is even working to affordably bring its fancy pants ACBS commercial servicing system to the unwashed masses of community banks needing an extra kick in their commercial functionality.
Despite Fidelity’s progress, one note of disappointment is the Horizon product’s relative lack of larger community bank ($3B+) sales momentum. Word of caution: If your core provider is publishing press releases for core renewals, there is a good chance it is not having a good new sales year.
More problematic than Horizon, however, is the company’s relatively new policy of how it assigns relationship managers to new core prospects, particularly if the prospect has an existing, non-core relationship with Fidelity. If Bank ABC has a non-core relationship with Fidelity, say a Certegy relationship, and the bank wants to review its core options, the Certegy rep – not the prospective core product rep – will manage the relationship. The obvious result is that new core sales processes may be managed by sales reps with next to no knowledge of the core products they are selling. Sure, they will get support from the core group, but this process is confusing to prospects and borderline insulting to the core reps. Fidelity already lost a small but pretty strong group of sales and sales support pros to the competition mainly over this issue. Fidelity will continue to win some deals under the new structure, but it will be despite the structure, not because of it. The question is whether the personnel fallout at Fidelity will continue.
Jack Henry continues to leverage its excellent customer service and responsiveness reputation to achieve steady market growth for both banks and credit unions. A great example of this is the company’s success in addressing the trend (not a groundswell, but a trend) of banks becoming generally more receptive to service bureau delivery for core and ancillary products. JHA recognized this trend earlier than most and has done an excellent job in assisting clients in making the in-house to outsourced delivery migration as painlessly and affordably as possible.
Jack Henry continues to have less success than expected in moving upstream with its Silverlake core product. One reason is that its teller and platform systems are just plain getting tired; these have to be updated. Another reason is the lack of relative progress that the company has had in utilizing its jExchange middleware to integrate with vast numbers of third party products. As Silverlake tries to sell into the $5B+ market, having a massive list of third party integration projects via jExchange to brag about is a must-have. While it is still too early to tell if this lack of progress represents a jExchange product problem or an “It just takes time” problem, Silverlake’s upward mobility will hinge on the company’s ability to successfully prove (not just talk about) its large scale, third party integration capabilities.
One thing that you have to give Open Solutions is that it easily has the most visible, aggressive sales force around. EVERYONE knows the name of their current or prospective Open Solutions rep. To help those reps back up their talk, the newest release of the company’s flagship product, DNA, is a step in the right direction when it comes to workflow and usability. While DNA still gets mixed reviews from our clients, especially credit union clients, the new release represents an early effort by Open Solutions to back up its technology talk with some technology walk.
That said, Open Solutions is still mired in customer service problems with its flagship and acquired clients alike. I hear the complaints on a near-daily basis. Open management will point to help desk statistics, improving customer survey results and hiring efforts to beef up service, but the bottom line is that customer service issues remain. To suggest otherwise implies that Open Solutions management either believes its own BS or is blissfully unaware of the scale of ongoing complaints.
Though Metavante continues to be competitive on many fronts, the best thing the company is doing right now is leveraging the NYCE network to its advantage. Metavante is using the network to find inroads into new core deals and, more importantly, to provide some very compelling financial proposals for prospects and existing customers alike.
The architecture, integration and marketing story that Metavante is telling about its co-development project with Temenos is ringing true as well, especially among large banks. Don’t get me wrong, the Metavante/Temenos story is FAR from proven, but market reaction to the concept of an incremental, component-based rollout of the product has been very positive.
While I have seen a slight trend to outsourced delivery, Metavante still struggles to sell to clients with their hearts set on in-house delivery. The IBS product is of course available via service bureau only, and the company does not have a credible in-house solution in the $1B+ market. Sure, Kirchman is out there, but Kirchman does not have an appetizing story to tell about new wins at large banks.
Two products are leading the way for Harland. First, its CreditQuest commercial origination and analysis tool has been receiving very high marks from prospects, clients and pundits alike. The market needed a product in this niche, and Harland delivered. Also, Harland’s Phoenix core banking product has been enjoying newfound market momentum. While most of this momentum has been on the lower end of the market, it is only a matter of time before Phoenix breathes some life into the mid-size bank market. Phoenix is also on a path to be introduced to the credit union market, where it stands a chance to tell a similar story (new technology and commercial banking know-how) to the tale that Open Solutions has so successfully leveraged in recent years. I would not want to be one of the alpha or beta credit unions converting to Phoenix, but the long term potential is there for the Phoenix to rise in credit union land.
Harland has a couple of problems from a marketing perspective. One is that the company simply does not have a convincing solution for $5B+ banks. Phoenix might get there, but it is not there yet when compared to the other players in that market.
Second, Harland has a believable story to tell about its ancillary products – Touché, CreditQuest, LaserPro, EZ Teller – the list goes on. However, Harland in its sales processes feels like a company that has many vertical products, but not a true suite. When my clients talk with me about Harland, they will list the various products it has, but seldom can they talk about a peer who is running a nicely integrated suite of those products with a Harland core product. Those banks may be out there, but they are not a point of emphasis from Harland.That’s how I see it. -Hodgins
Many thanks to Terence Roche and Steve Williams for their input and feedback for this article.