The Wall Street Journal published a story about small banks beginning to rebel against the Big Three Oligopoly ("the BTO") of core IT suppliers Fiserv, FIS and Jack Henry - now commanding more than 90% of market share according to CELENT. I was interviewed extensively by the writers about the ease (or difficulty) of technical access and economic affordability when banks need unfettered access to their data (i.e. for third party fintech partners). While they are starting to provide access, they're doing it in a way that unfairly monetizes your data to their exclusive benefit. Here's how.
How does a $1.6B mutual bank in a small Massachusetts community find a way to drop more than $4.4 million in cash to their bottomline without changing a single IT supplier or interrupting one of their online customers?
Simple. Beginning in 2014 they took the long-game view and intelligent approach to negotiating against their very powerful core IT suppliers and critical technology vendors. BayCoast Bank is run by Nick Christ and was recently awarded the prestigious ICBA National Community Bank Service Award, Grand National Winner, but Mr. Christ has a secret weapon within his ranks - Dan DeCosta their Chief Information Officer. Mr. DeCosta is as friendly as any banker has been created but inside he is a shrewd technologist and businessman that knows how to leverage the power of outside expertise, market intelligence and pricing data with the patience of a tortoise prepared to ultimately beat any other hare.
Excessive fees create a manufactured barrier to acquiring competitive technology that would help the banking industry survive and flourish. This is an unfair business practice at any measure and may not be legal in many states.
The vast majority of middle-market community banks and credit unions will at some point explore acquiring or being acquired because M&As are one of the quickest and most effective ways a bank can scale up, expand reach, and grow. Unfortunately, many of these banks have no choice but to watch lucrative M&A opportunities pass them by because they unwittingly agreed to grossly unfair and inequitable terms in their core and IT contracts.
Global independent investment banking advisory firm Evercore ISI interviews fintech expert Aaron Silva on all things banking. Listen now to Aaron's predictions for the banking industry: bit.ly/SilvaOnEvercore
In this comprehensive expert panel discussion at LendIt Fintech 2018, Paladin's Aaron Silva leads a compelling and lively discussion about how financial institutions are navigating the exciting world of fintech. Topics include innovation, opportunities, resistance, analytics, security and much more. Four renowned experts participate in the podcast every bankers should hear. Listen NOW:
Your bank is constantly looking for ways to improve its fintech as competition from the big banks steadily increases. Routinely you turn to your current core and IT suppliers for ancillary add-ons like mobile deposit, fraud detection, a CRM or a new EFT card services feature. There are a million options your supplier can up-sell that will improve the current core solution. There probably isn’t an institution in the United States that doesn’t have a quote on someone’s desk waiting for approval.
As we enter 2018, it's more crucial than ever for local banks to focus on their bottom lines, and for credit unions to improve member value. The number of banks with less than $100 million in assets has declined by more than two-thirds since 1995 — due in large part to big banks usurping market share.
Sell your bank and face the wrath of the Core IT oligarch’s power when they unfairly levy termination fees that typically range from 50% to 100% of remaining contract value.
If you’re fortunate enough to be the acquiring institution in the same M&A deal, don’t get too comfortable watching their shareholders take the low blow as you handicap the purchase price to adjust for their misfortune. The Core IT supplier “partner” will inflict that wire-hanger whipping as soon as the definitive deal is inked.
At Paladin, we are to committed to charitable giving and investing in people and organizations who work hard for those who have greater needs. And because everyone can use a helping hand, support or guidance at one point or another, we launched our Paladin Gives Back: Power of One Reference program, and we’re proud to announce we’re seeing compelling results.
One of the charities we’ve worked closely with for years, and have remained loyal to in this endeavor is Opportunity Junction, an organization that fights poverty by helping low-income Americans garner the skills and confidence necessary to both attain and sustain jobs that will help support themselves and their families. We would like to share with you the below letter our team recently received from Alissa Friedman, Opportunity Junction’s Executive Director, as a clear example demonstrating the payoff our charitable dollars have generated within the community.