Mr. Art Gillis

GLG News by Mr. Art Gillis, President

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Not all bank tech vendors are equal

December 12, 2011

FIS, Fiserv, Jack Henry and Harland Financial Solutions are in the same business and sell similar products and services to the same financial institutions.  That's where the similarities end.

It's the Buying Season for Bank IT

October 8, 2010

Analysis of:N/A | www.artgillis.com

 After two years of drought spending, banks appear to be gearing up for new tech purchases.

The Things Investment Analysts Want To Know About Bank Tech Companies

September 20, 2010

 This is a list of popular questions that investment analysts have asked me in the conduct of 239 consultations.

There Are 814 Good Reasons For A Bank To Switch To A New Core System. One Is Usually Enough.

October 20, 2008

Analysis of:Despite Tons of Talk Banks Don't Upgrade | www.americanbanker.com

As long as the de novo movement continues, there will be new core sales.  Last year, 39% of new core sales were to de novo banks. In my opinion, there are 1,280 FIs that are ripe for a better core system and the only way they’ll get it is if vendors commission Buffett/Gates sales types to make it happen.  Waiting for a brand new core system to make it happen, the likes of which the ten offshore companies sell everywhere else but the U.S., will only result in disappointment.  Bankers buy functionality, not architecture, and today’s top U.S. systems have more functionality than the economy has bad news.  In fact, some of that functionality (for example, Risk Management) helps to skirt the reasons for economic bad news.  And remember, I’m not a salesman.  I show up after the bank CEO bites the bullet to replace the core.  With so many other bullets that bankers are dodging these days, I don’t expect I’ll get many calls.

HP and EDS - Is it a Win-Win? I Predict a Lose-Lose

June 6, 2008

Analysis of:HP to Acquire EDS for $13.9 Billion | www.hp.com

My experience with EDS goes back to 1962, not because it was day one for EDS, but instead, to tell you how bad I am at predicting success stories.  What I’m good at is predicting failures. 

If You’re Not Happy With Your Bank’s Core System, There are 101 Solutions Offered by 32 Vendors Who Would Love to Talk to You, Maybe

May 19, 2008

Analysis of:High Five for Fiserv | online.barrons.com

First, a few definitions for the sake of context clarity  -  A “solution” is any brand name system offered as an in-house system or outsource service, and driven by the owner of the system, or a third party.The group of 32 vendors includes any company that has customers that rely on that company to keep their core system running, but all 32 vendors may not be in the business of selling their system to the entire U.S. population of Finical Institutions (FIs).  Thus the reason for the “maybe” in the title.  The distinction of selling core systems to any FI in the world applies to about a dozen companies.

There are Fewer Bank Tech Companies but More Solutions in the Marketplace

April 14, 2008

Analysis of:The FutureNow List | www.americanbanker.com

In 2001 there were 165 companies selling 223 solutions to banks, thrifts and credit unions.Today there are 71 companies selling 306 solutions. That’s 57% fewer companies; 37% more solutions.During the past seven years there were a total of 162 mergers and acquisitions in the account processing sector of banking technology.

Congratulations to all who were in the bank tech world in 1985, and are still here to remember

March 25, 2008

Analysis of:Jack Henry Banking(TM) Expands Client Relationships With Cross Sales of ArgoKeys(R) Branch Sales Automation Platform | www.earthtimes.org

My bookcase contains 22 past editions of Automation in Banking.  The 23rd is still in the oven.  The 22 are dog-eared because I have had to refer to them many times to answer questions from very intelligent readers who had a need to know.  Last week I read the 1985 Edition, and here are some highlights that got my attention:

Consolidation - Predictable for banks, Anything goes for tech vendors

March 14, 2008

Analysis of:Fiserv to integrate CheckFree, Interactive Technologies | atmmarketplace.com

It’s numbers crunching season again for me, and my outlook has been confirmed as if a combined team of Big Four auditors ripped through my databases looking for errors, omissions and even fraudulent opinions.The financial institutions landscape:The number of banks, thrifts and credit unions continues to contract at the consistent average annual rate of 3.44% (2.4% to 7.7% for the past 18 years).  I didn’t round it; it’s the real math, and the real numbers as reported by Highline Financial. So if you want to use a pretty good figure to project the next ten years, may I suggest 3%?  Don’t ask me why it’s 3%.  Ask Alan and Ben.  That part of the consolidation scene is as predictable as reading ads about bank CD offerings in your local newspaper.  No matter where the dart lands, the answer will be the same.  In 2008, 3% of all FIs will accept the fact that they are going to throw in the towel.  On December 31, 2008 we’ll know the 506 by name.

If I were the CFO of a bank tech services company, I would.......

February 28, 2008

Analysis of:Collaboration Is Job One | www.banktech.com

You can fill in the rest of that title statement as you see fit.  The reason I am writing this analysis is because clear-thinking investment analysts believe that when banks are in trouble, they will cut back on tech spending, among other expenses.  That’s a logical position to take, at least on the surface, but there’s more to this issue than a surface look, and I’d like to explain the details.This is how I would complete the title statement.  .........do the following three things.

So you’d like to see some changes in banking, eh?

February 13, 2008

Analysis of:CORILLIAN AND STRIKEFORCE PARTNER TO FIGHT FRAUD BY STRENGTHENING ONLINE AUTHENTICATION FOR FINANCIAL INSTITUTIONS | www.windowsfs.com

Two years ago, I saw a list of opinions regarding his/her/their “own grandiose challenge to the industry.”  In my opinion, it was more like an in-your-dreams list, so I saved it to see if a couple of years would produce any kind of change close to the dream.  The short answer is, it would take decades or fuggetaboutit.  Here’s the score card:

The sky might be falling, but IT companies are protected

February 5, 2008

Analysis of:Acopia Capital Group Utilizes OpenClose as Backbone for New Company | www.businesswire.com

Three conditions affecting the banking business seem quite real and have already become visible in the form of poor earnings reports from the giants  -  losses in investment banking, the credit crunch and subprime mortgages.  So it’s natural to look to the left and right for other industries that might be affected.  Of course, IT is a likely candidate for losses because as bank profitability goes, so goes IT investment.  Maybe.

2008 - The Year of the Sales Rep

January 17, 2008

Analysis of:IBM Wins Series Of Bank Technology Deals | www.informationweek.com

 have completed 154 consultations for 67 investment firms in the past two years.  The analysts asked a lot of good questions, and none that I didn’t expect, about the performance of bank tech companies.  However, no one ever asked me about the competence of the sales force.  Not one  -  nada, nyet, rien, niente, keine, tipote.  So I feel the need to speak out about the condition of the bank tech vendor community.  Most of it is good.

Year-End: Joys, Ho-Hums, A Pause that Refreshes Some and Disappoints Others, An Overnight Credit Crunch and Mortgage Disaster, One Big Acquisition, A Few Surprises, and A Whole Lotta FUD

January 7, 2008

Analysis of:Purchase positions Fiserv tops in tech | www.jsonline.com

In my view, 2007 was not a Boston-Sports-Teams year for the banktech business.  There were some losers in our arena, as well as lots of worries;  a large number of lower stock prices for banks and techs;  a ninth inning attitude among bankers who achieved a good-enough system to get the job done, and then took a rest;  certainly nothing new and exciting showed up to compete with the likes of Apple Computer.  But one has to recognize the good things.  For example,  U.S. banking transactions got posted accurately and on time during 4,308,198 posting runs in 2007.  Presumably 112 million households were pleased with the processing of their accounts.  And I believe business customers got the same accuracy and timeliness.  The press had far more compelling events to write about than to look for banking glitches.  I was interviewed for only two failures in 2007 and both were ATM related, and both were corrected within 24 hours.

Timing Isn’t Everything, It Just Separates The Winners From The Losers

December 31, 2007

Analysis of:Oracle Hangs a Solid Q2 on a Thick Neck | www.eweek.com

Domestic core system vendors vs. International core system vendors.  Every week I read about a new sale made by either i-flex solutions, TEMENOS, Infosys, Misys, or Tata Consultancy, and they are mostly significant sales.  But their marketplace is not the U.S.  There’s a more active market out there called “the rest of the world.”   While this robust new business activity is taking place, U.S. vendors are still looking for the passport office.

Banks do it, home builders do it, automakers do it, consultants do it, and now, even bank tech vendors might lay off employees for the first time in history

November 26, 2007

Analysis of:IT jobs may go overseas | business.smh.com.au

As if there isn’t enough bad news about the economy, here I am adding to the heap before it even happens. As much as I don’t like bad news, what’s worse is bad news that comes as a surprise. So be prepared. Just follow the facts, and then draw your own conclusions. We may see the bank tech sector face similar job cuts.

Big bank vs. small bank - Which one has the best technology?

November 14, 2007

Analysis of:Heed the Call of Web 2.0 | www.banktech.com

Once again, I first must confess to a bias before making this case. “Big” by itself has never impressed me. “Big and capable” is another matter. So when I tell you that small banks have better technology than the giants, I’m ready to defend my statement with facts. I believe that there is better technology within smaller banks.

Metavante has a pile of cash now, but does it have a list of good acquisition candidates?

November 7, 2007

Analysis of:Marshall & Ilsley Corporation and Metavante Technologies, Inc. Announce Completion of Separation | money.cnn.com

With excess cash from the seperation, what are the possible acquisition opportunities for Metavante.

Bank IT spending continues to increase in spite of lower bank earnings reports

October 19, 2007

Analysis of:Will BofA Retreat From Investment Banking? | dealbook.blogs.nytimes.com

With many big banks such as BoA, Wachovia and Citigroup reporting record breaking losses in the 3Q, there shouldn't be any less spending for new bank technology in the future. We may see consolidation of banking & trading divisions, but technology will come to the forefront in spending from banks.

Signs of entrepreneurship are appearing in the bank tech world

October 10, 2007

Analysis of:Diebold Releases Innovative ATM Depository Technology | www.bobsguide.com

Bank Technology has seen an expansion in new technology that has been built on old technology. It is not just the bigger organizations but the smaller entrepreneurs that are in the running.

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