Three months into 2018, and the year is already shaping up to be the “year that could’ve been” for international core vendors in the U.S. regional banking market (i.e., roughly $10 billion to $50 billion asset range).
Some big wins for the Blue Logo Gang (Infosys, Temenos, SAP, Tata Consultancy Services) have been announced and implementations are again in process—e.g., Temenos at Commerce, TCS at Zions—after some high-profile busts over the past decade. But it’s hard to put a happy spin on what’s really going on out there.They Coulda Been a Contender
Regional banks are looking to the foreign players for things domestic vendors aren’t delivering on—speed-to-market, lower costs, modern architecture and new capabilities. A lot of bankers wouldn’t even consider converting if their existing providers provided a few of these things.
International core vendors have a tremendous opportunity but are blowing it with their inability to communicate basic information to the market. Across the board, the Blue Logo Gang presents its “demo-by-PowerPoint” laden with common service-oriented architecture visuals and buzzwords like “product engine,” “stack,” “expose everything as a service,” and my personal favorite, “omni-channel hub.” But no actual demo.
Can We Get a Few Questions Answered?
Getting answers to a few basic questions would make life easier for everyone involved. Regional banks want more clarity regarding the Blue Logo Gang’s:
Given the lack of basic information, not to mention actual live U.S. deployments to date, there aren’t too many institutions with the fortitude to commit to a core conversion with an international core vendor, but those that do want to have a really good idea of what makes taking the perceived risk worth it. Why is “real time” good financially? Why is modern architecture? Inquiring minds want to know.
Who Should Be Looking at the Blue Logo Gang?
Direct banks make up some of the early deployments and are natural candidates along with banks with a need for multicurrency capabilities. There are also examples of foreign banks with live U.S. subsidiaries. That’s just a small sample of the thousands of banks in the U.S., however. In addition to having a desire for thrill-seeking and the patience to endure at least 12 months for a core conversion, other characteristics of banks that are good candidates for the international vendors include:
Architecture is indeed an attractive aspect of these solutions, but don’t let the “architecture astronauts” drive the selection process. Attention to good old-fashioned requirements and business unit engagement are also important when investigating core alternatives.
A vibrant, competitive, U.S. core banking environment is beneficial for banks. The Blue Logo Gang has an opportunity to make that environment a reality. Getting specific and real with regional banks would be a great first step in that direction. And maybe next time I sit down to write about international core vendors I won’t come away so blue.