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.