Paladin Blog

The government moves at the speed of a glacier with a bad hip. But every once in a while the glacier actually gets somewhere.

Hi, I'm Daniel. And I Was An Idiot.

I’m the CFO of In Vendors We Trust Bank - have you heard of it? I’m a banker just like you. I work hard, I manage my balance sheet meticulously, and I take pride in making decisions that benefit my community bank.

Meet Daniel, The Banker Who Had It All Figured Out..until he didn’t.

Daniel is a sharp, capable community banker. He knows his market, he manages his risk well, and he prides himself on making financially sound decisions for his institution.  So, when the dreaded core IT vendor contract renewal from FIS landed on his desk, he saw it as just another business challenge to conquer.

Let me tell you about one of the worst trading days of my life.

The Writing's on the Wall - In Disappearing Ink

Attention, community bankers! The tectonic plates of banking technology are shifting, and if you're not paying attention, you might just find yourself doing an impromptu dance on the San Andreas Fault of financial services. The latest tremor? Our friends at the Big Three - Fiserv, FIS, and Jack Henry - are starting to play a high-stakes game of Jenga with their services, and guess who's left holding their breath as the tower teeters? That's right, it's you, the community banks and credit unions.

Fiserv has decided to kick off this party by beginning to ask their clients to ride into the sunset without Retail Online Banking (ROB) and Business Online Banking (BOB) services after December 2026. If you think that's a problem for future-you, think again. In the glacial world of core banking systems, 2026 is practically next Tuesday.

I have recently been enjoying this classic TV show with my 10-year-old son. 151 more episodes to go! He is enjoying a classic show his grandparents watched at the same age, but he does not bank with a financial institution running COBOL (Common Business-Oriented Language). Some things stand the test of time. Your core processor running COBOL will not.

The pandemic of 2020 has been a major business disruption and distraction to the community banking industry - and all industries globally for that matter.   Albert Einstein was famously quoted, "In the midst of every crisis lies great opportunity."   This fact is not lost on  the legacy Core & IT suppliers Fiserv, FIS and Jack Henry as they have recently blanketed their current clients with pre-emptive and unsolicited contract renewals years ahead of their maturity dates.   These "Pandemic Deals" as they are being referred to, are finding bankers flat-footed and making many to feel cornered into a long-term, multi-million dollar decision at a great time of uncertainty and when their collective minds are on so many other pressing matters.  Bankers that have contacted Paladin feel these offers are intimidating as some vendors tease "take -it-now-or-leave-it" deals that feel more like a strong-arm tactic than a partnership hug.

Three sales reps from Fiserv, FIS and Jack Henry walk into a bar one night and belly up to the counter. The bartender says, "What would you three gentlemen like?"  In unison they all answered, "A banker with less than 12 months on his contract willing to negotiate alone!"

Bankers News published an article featuring Paladin President, Aaron Silva, discussing frustrations by banks with their core providers.

"Gather a group of community bankers and you'll quickly find their common ground: A bad experience with a core processor. Their complaints might focus on lack of responsiveness, steep conversion or deconversion fees, or brutal terms to terminate a contract early; whatever the problem, the result is frustration."

Our President, Aaron Silva, weighed in on the topic.

Buried deep in the fine print of your Core IT agreement is something called an “Exclusivity Clause”.  Most bankers don’t know it exists.  Most again don’t know what it means until they bring a competitive solution from a newer fintech to the relationship.  Bankers are surprised to find out that a vendor armed with the Exclusivity Clause (EC) has near total control over your destiny – at least for the next 5, 7 or 10 years.  Unless, of course. you are prepared to cough up 50%, 80% or even 100% of the remaining contract value to exit the service for greener pastures. This is completely unreasonable but it’s important to understand how we got here before we chart a course of freedom.