Paladin Blog

Negotiating Like a Boss

Posted by Aaron Silva on Mar 12, 2019 9:27:36 AM

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.

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Topics: Contract Negotiations, Paladin Success Stories

Terminate the Termination Fees: Banks must put an end to outrageous terms

Posted by Aaron Silva on Nov 5, 2018 2:18:26 PM

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.

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Topics: Contract Negotiations, community banks, Credit Unions, vendor merger, M&A

Community Banks Discovering Advantages of AI, But Can They Actually Acquire It?

Posted by Alex Lopatine, Managing Director of Fintech Advantage on Sep 10, 2018 3:47:19 PM

The experts agree. Artificial intelligence (AI), the process of machine learning, is exploding and we’re just getting started. According to Gartner Research, AI is the number one strategic technology trend in 2018. The American Bankers Association says AI is one of the top five fintech trends that will drive the next decade of banking.

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Topics: Contract Negotiations, community banks, Fintech, open banking

Impact of Core and IT on Mergers and Acquisitions: Protecting Shareholder Value

Posted by Aaron Silva on Jul 12, 2018 11:27:09 AM

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.

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Topics: Contract Negotiations, community banks, vendor merger, M&A

Listen now: Evercore ISI interviews Aaron Silva

Posted by Aaron Silva on Jun 14, 2018 10:36:43 AM

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: 

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Topics: Contract Negotiations, community banks, Fiserv, Fidelity, Jack Henry, Vendor consolidation, Credit Unions, vendor merger, M&A, Fintech, open banking

Cost Control: Ferreting Out Hidden Costs to Improve the Bottom Line

Posted by Aaron Silva on Mar 26, 2018 10:28:19 AM

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. 

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Topics: Contract Negotiations, community banks, Credit Unions, M&A

New Beginnings: Strategies to Avoid Mistakes of the Past with Core Banking Software Suppliers

Posted by Alex Lopatine on Mar 15, 2018 1:22:39 PM

It's the beginning of a new year, and that equates to an opportunity for a fresh start. For community banks and credit unions, this means the chance to review what obstacles have held them back from competing with the big banks on a level playing field — and to develop strategies to overcome those hurdles in 2018. 

Since 1994, the loan market share held by big banks (financial institutions with assets greater than $10B) has relentlessly increased from 50 percent to approximately 80 percent. This has left community banks and credit unions with less than a quarter of the overall market — an already meager slice of the pie that is steadily shrinking.

So what happened?

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Topics: Contract Negotiations, community banks, Credit Unions, M&A

Core IT Suppliers Join the Joan Crawford Fan Club

Posted by Aaron Silva on Jan 22, 2018 7:00:00 AM

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.

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Topics: Contract Negotiations, community banks

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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Topics: Contract Negotiations

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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Topics: Contract Negotiations