One dilemma that blew me away as I reviewed The Cornerstone Report results this year was how much we are struggling as an industry when it comes to cash management:
Clearly, there is a serious problem going on with commercial banks’ cash management sales efforts. I cannot think of a client who has told me about how thrilled they are with their cash management fee income or penetration rates, and that problem is only heightened lately as banks fall all over themselves to replace NSF/OD income.
Sales efforts notwithstanding, there is a product problem out there, too. All areas of all banks struggle with integration, but integration is lacking in most cash management departments. A huge portion of this problem falls directly on the shoulders of the cash management vendors. They have done a mediocre job of integrating their product suites into the key core players’ systems. But damn, just try to integrate one vendor’s commercial Internet banking and bill payment modules with another vendor’s wires product. Throw in yet another vendor for ACH, and you will experience an anarchic display of vendor finger-pointing, nay-saying and doublespeak.
And just when we need them most, the middle and upper middle market for commercial cash management products is in mid-upheaval:
ACI – After a year of trying, ACI finally snared S1 in October of last year. For years, ACI has had a reputation for strong, functionally rich products offered by a company that can pretty easily come across as arrogant and wildly difficult to work with as a client, prospect or vendor “partner.” Very large banks tolerate, sometimes even embrace, that kind of corporate personality, but will ACI be able to go downstream into the minutiae of the S1 customer base with long term success? To me, it’s doubtful. Whether I’m right or wrong, though, former S1 customers realistically have a long road of corporate changes to deal with before they start to see much real direction or progress in the product set.
Intuit – Intuit sold its commercial banking business to Bottomline Technologies in March of this year, though Intuit will still be involved in the business through some double-secret-end-around reselling and co-marketing efforts. No one knows how Bottomline will approach the lower end of the market, and we already know that Intuit was never outrageously successful in its commercial banking online efforts. The combination has potential, but again we have a waiting period to see how the sale will affect product direction, pricing, management style, etc.
Fundtech/BankServ – Research analysts will tell you that this combination, which finalized in late 2011, should lead to a tightly integrated suite of products from high-end banks down to community banks. There will be a lot of time, teeth gnashing, internal politics and mismatched technologies before we see even a specter of that happening. And with a private equity owner (GTCR Golder Rauner LLC), we have a whole new level of uncertainty to manage.
Yikes, Gonzo bankers, this is a market chock full o’ ambiguity. What’s the plan in two minutes or less? If you’re in the market for somewhat higher end cash management functionality, you have a couple of realistic choices:
Whether you’re just window shopping or you’re ready to lock in, Cornerstone Advisors has the scoop on the vendors and their products. We have assisted hundreds of financial institutions make educated system decisions – to evaluate their options, negotiate their contracts or convert to new systems. Visit our Web site or contact us today to learn how you can gain complete peace of mind when it comes to vendors.
One thought on “VendorDirt – Cash Management Style”
How did you succeed in growing pot in a desert cave, because you were certainly smoking something when you wrote this bad boy…
Your first four paragraphs are right on. Even the comments about the effectiveness of bank treasury sales people is true. And yes, getting systems to integrate is a pain in the rear end.
But the biggest problem with obtaining commercial buy-in of cash management products is making them easy to use. Focus on these three problems, and you’ll make oodles of sales…
1.- Complicated Passwords (You have to change your password every 7.5 hours…Ok even every 60 days is a PIA! The password must contain 1 CAP Letter, 1 small letter, 1 number and 1 sign…gee I’d like to shoot the “!@#$%*ing” system right now!!!)
2. – Multi-Factor Authentication (Or in plainspeak…regulatory abuse! This one kills small and middle market business owners. I’ve entered a company code and a user code and a password for each, and now you want me verify a baseball or a daisy on my viewscreen…REALLY?? Ok, I went overboard there, but in these days of antivirus software gone ballistic, MFA just creates another hindrance to getting the information I need.)
3. – Too Many Rules (Are you telling me that if I don’t go into my Positive Pay system every morning before 10 a.m. that you’re going to bounce every check in for payment last night?? Or how about this one…my ACH file limit is $50,000, unless it’s the end of the month and I bump up against my monthly limit of $500,000…oh and my assistant controller is on vacation this week, so there’s no one to call and do a verification of that file…great!)
The cash management sales people think like risk managers, instead of sales reps; shooting themselves in the foot and scaring clients away from cash management products by making it miserable to use the very tools that are supposed to make management of a business’ cash easy.