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
Chapter 1 - The M&A Analysis (Special Edition)
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.
Trekkie fans will understand the reference to the BORG and what it fees like when you don't have many choices. The assimilated Captain Picard provides this famous line, "...from this time forward you will service us." With the recent purchases of OSI by Fiserv and Harland by D+H many bankers believe the line could be rewritten, "...from this time forward ONLY we will service you...And you have nothing to say about it."