Paladin Blog

Aaron Silva

Recent Posts

Paladin Gives Back

Posted by Aaron Silva on Aug 23, 2016 11:25:12 AM


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.

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The Incentive of Doing Nothing

Posted by Aaron Silva on Jun 15, 2016 8:00:00 AM

For community financial institutions, it’s customary that every 5-7 years the decision must be made to either stay and renegotiate with their Core and IT provider or embark on a new contract with a competing vendor. When this time comes, it’s important that all decision makers have the right information, which can create more work for the banking staff with minimal incentive.

After many years of fighting on behalf of community FIs and countless conversations with senior bank executives, the truth is that senior management and their staff are not always receiving objective and unbiased information when it comes to identifying the best options for their franchise because there is so much extra work involved (with a future core conversion) —which in turn creates an incentive to stay put with their original vendor.  

In a recent conversation with the COO of a past client, an $800 million asset bank in New England, I learned that he believes his staff, and just about the staff of any community bank, has a natural incentive to want to do nothing when it comes to the question of staying or going. 

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Tags: Contract Negotiations

Oligopoly Affecting What You Really Pay for New Products?

Posted by Aaron Silva on Jul 2, 2015 2:03:00 PM


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No Such Thing as a 10-Year Core IT Contract

Posted by Aaron Silva on Feb 20, 2015 4:14:00 PM

How can any of us bet on the function and value of technology 10 years from now?  When you think of the question a few times the answer appears obvious.  You cannot.  It would be impractical.  Unreasonable by any measure.  However, vendors are doing a great job of convincing banks and credit unions they need a 10-year deal.

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Tags: Contract Negotiations

The M&A Analysis: The Impact of Core IT Contracts on M&A

Posted by Aaron Silva on Oct 10, 2014 4:03:12 PM

Chapter 1 - The M&A Analysis (Special Edition)

Special Edition MA Analysis

Two annual studies by the BPI Network (June 2013 and July 2014) include specific details from several recent merger deals and proves that Core IT contracts are increasingly, and now more than ever, ambushing unwitting bank leaders and negatively impacting mergers. In some instances Core IT contracts are outright killing deals before they can even start.  Bank leaders are usually the cause due to a lackadaisical approach toward these business concerns - mainly because few of them understand this area of Non-Interest Expense nor have they previously received training on how to negotiate these areas of an agreement. 

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Tags: Paladin Research, vendor merger, M&A

Will Core Providers Lead the Industry Forward or Into an Abyss?

Posted by Aaron Silva on Aug 26, 2014 11:48:00 AM

Vendor oligopoly threatening industry recovery and M&A transactions nationwide. 


After two years of continual research the BPI Network has confirmed our worst fears about the impact on community banks and credit unions resulting from the oligopoly now enjoyed by just 5 major Core IT providers nationally.  Bank and Credit Union leaders must now deal with this clear and present danger to their long-term strategic planning and cost management goals.  BPI’s survey and report confirms that while economic optimism is rising, unfavorable legal terms and price gouging hidden in vendor-crafted master agreements and cost structures are raising major headaches during mergers and contract renewal negotiations. 

The reports confirm:

  • Price inefficiency is rampant. Similar sized institutions pay wildly different amounts for the same exact services. Institutions in the South and West pay more than any other region.
  • Bankers have no way of understanding if they are paying FMV or not and vendors have taken advantage of this for many years.
  • The odds of achieving Fair Market Value for any service can only improve if intelligently restructuring contracts that with the help of hard market data and outside professional negotiators.  On average BPI says institutions they tracked are reducing 5 year run rates on average by $1.2 Million if done intelligently.
  • Hidden terms lay waiting in contracts ready to ambush mergers and weaken shareholder value just when you need it the most.
  • In the absence of competition - and an effective oligopoly - vendors hold all the cards and are making negotiations very time consuming and expensive for small institutions.
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Tags: Vendor consolidation

Wisely Restructuring Requires Strong Internal Management

Posted by Aaron Silva on Aug 7, 2014 12:38:00 PM

By Aaron Silva

Contrary to popular belief, you cannot just pick up your Core and IT service contracts a few months before expiration and hope to get it restructured in a way that isfavorable to the franchise. Frankly, this may be the worst timing with respect to trying to get your contract restructured. The act of negotiating a renewal agreement can begin the minute after you sign the original agreement and then continue for years.  It takes a team that is in control, well managed, detailed and articulate.  And it takes strong management to make sure it gets done and at the right time.


Be honest.  Are you one of those banks that manages your contracts with an Excel spreadsheet? If you said yes then congratulations, you are in the majority.  While Excel is a great database for this type of "stuff", it doesn’t work unless you actually open that particular worksheet or workbook in time to review your renewal dates.  This means you have to set a reminder in your Outlook calendar or other system.  Sometimes you might delegate this internally. Either way, it’s inefficient and relies on a human and is now subject to human error.  Outsourced Core and IT services contracts with the likes of Fiserv, Fidelity, Jack Henry, CSI, D+H, etc. are usually the second largest expense in your institution, behind payroll.  Weigh down this reality with the fact that they are one of your most critical vendors and this is no small matter or fleeting concern.  Make a mistake and it will be another 5 to 7 years before you get another shot at your core vendor contracts.  An Excel spreadsheet is just not enough and wisely restructuring is key.

Contract Management Systems

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Tags: Editorial

Cough! Cough! Are You Ready for the Financial Service Industry Plague?

Posted by Aaron Silva on Aug 4, 2014 6:41:05 PM

Cost Inefficiency – An Industry Plague

By Aaron M. Silva, President Paladin fs, LLC

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Tags: Contract Negotiations, community banks, Credit Unions, Editorial

New Ideas for Achieving Unexpected Returns for Shareholders.

Posted by Aaron Silva on Aug 4, 2014 9:37:00 AM

A 2nd annual report from the Business Performance and Innovation Network (BPI Network, focuses again on the impact that core and IT services contracts have on community financial institutions nationwide.  The 2013 report titled “Less Burn, More Return” was well received by the market and generally panned by major core service providers. The newly released 2014 report, titled “The Core Way Forward,” will have a positive reception by bankers as it is a tome of informational data and analysis, never before assembled in one resource.  The report includes:

  •       The results of a comprehensive ‘state of the industry’ survey sent to 15,000 bank leaders. 
  •       A line-by-line analysis of 54 actual contract negotiations between bankers and vendors ranging       between $150 Million to $5 Billion in assets.
  •       Specific M&A section that details real-life examples of contracts’ impact on mergers.
  •       Insights and advice from industry experts including legal, compliance and investment bankers.
  •       Peer reviews and commentary on their experience negotiating contracts with core services vendors.
  •       An assessment of the impact of vendor consolidation on a bank leaders ability to negotiate a fair market value contract.



Key Takeaways from the Core Way Forward Report.

Impact on Mergers is Real.  The number of mergers has grown since the Less Burn, More Return report was issued in 2013 and of those that have taken place, an ample number were tracked in BPI’s, 2014 The Core Way Forward report, which allowed for actual and quantified measurements of impact. I believe, as the valuation of an institution moves away from tangible book value to profitability, we will see the entry and exit clauses of these agreements reaping havoc on M&A deals going forward unless bankers are willing to attack these agreements in advance, rather than waiting until they already have an LOI or purchase agreement working with another bank.  The Core Way Forward report points out that leverage with vendors is wasted if you ask for help after word on the merger is out.


Vendor Consolidation: Vendor consolidation has turned the tables of negotiation even further against the industry.  With so few vendors (the report details a total of 5, 3 of which control 85% of the market) there is little competition. Demand for core and IT services [according to BPI’s survey] will increase for the foreseeable future.  An oligopoly has formed and there is real concern that banks will have a difficult time getting a fair shake.


Hard Market Data Trumps: No longer can institutions go into a renewal situation with professional negotiators unless they are armed with information that can be backed up and substantiated. Very little efficiency in pricing exists, according to BPI Network, and this may be a result of vendors delivering a “get what you can” approach to pricing. Companies like Paladin, which is equipped with the Paladin Blue Bookdatabase, are keeping vendors fair and allowing for an introduction of favorable terms and conditions into contracts. Accomplishing these conditions is not without great amount of time, effort, finesse and experience.


Over the coming months Paladin will break apart BPI’s The Core Way Forward report into small, manageable and easy-to-understand chapters. These sectionals provide education and analysis of the material, as well as additional information and insights not found in the report.

You may also find this article in the not yet published quarterly magazine from Community Banker's of Washington's.  Click here to view Summer 2014s publication.

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Tags: Contract Negotiations, Paladin Research, community banks, Credit Unions, Editorial

Clint Eastwood Designs Most Banking Events

Posted by Aaron Silva on Jun 3, 2014 3:20:00 PM

I think it may be true. Clint Eastwood has been secretly behind the physical design and layout of most banking and credit union events for years. This theory dawned on me this spring as I attended and spoke at many national and regional events all over the country. Until starting Paladin fs in 2008, I spent most of my career as your typical vendor selling IT services to bankers. Today, I spend all of my time representing bankers in difficult Core IT negotiations with their vendors (Fiserv, FIS, JHA, S1, Q2, etc). Back in the day, attending and exhibiting at events became almost obligatory if you wanted to "get noticed" or hoped for someone to buy your wares. Being stuck behind a booth in the exhibit hall next to three of your competitors with flashier pens, higher-priced golf putters is a difficult and thankless pursuit. The days are long laced with many hours of boredom while your targets attend breakout sessions or play golf. Then, two to three times a day, a stampede of bankers rushes past you to acquire coffee, food or alcohol strategically located at the other end of the hall - that reminded me of the famous 1977 Clint Eastwood movie, The Gauntlet.

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Tags: Contract Negotiations, Paladin Research, community banks, Fiserv, Fidelity, Jack Henry, OSI, Vendor consolidation, Credit Unions, bank events, credit union events