Payments Views

B2B Payments

Co-Dependence Between Banks and Their Technologists: Hampering Innovation

Talking to banks and the biggest bank technology vendors at NACHA’s annual payments conference last week I couldn’t help thinking how they suffer from similar challenges. Big banks are hampered by their complex technology environment of legacy solutions with layers of more modern solutions built on top. Products and customer segments are managed in silos defined by old payment approaches that are no longer valid in our digital age. In these trying economic times lines of business and operational teams compete internally for resources and have many distractions (regulation, rounds of layoffs, etc.) that distract them from their customers.

Meanwhile the biggest banking vendors have grown through acquisition and have similar organizational silos build around traditional solution sets. Despite their outward attempts to present comprehensive, holistic solutions they too are hampered by internal fighting for resources and strategic focus, exacerbated by the fact that lines of business and product groups are often former competitors from their pre-acquisition days.

The revolving door of leadership between banks and their solution providers doesn’t help.

It’s no wonder that banks and their big vendors aren’t very nimble! Even if they knew today exactly what to do to delight their customers and achieve true differentiation it would take 18-24 months before they could incorporate it into their respective release schedules.

This leaves an opening for smaller and/or focused providers that can move relatively quickly. Not all startups have the tenacity and resources to go to market without bank partners.  Thus, to achieve meaningful economies of scale, the upstarts often need to sell their solutions through banks and the dominant technology vendors, and as a result are paralyzed by the same 18-24 month release cycle.

It’s depressing.