Like a marriage, a bank-vendor relationship requires hard work to succeed.
But often such partnerships are like failing marriages in which disappointment and resentment have shut down communication.
A provider will not shape up into a Cindy Crawford if it knows you'll put up with a Roseanne. And indeed, it may be too late to change your current provider's ways.
But before you choose another one, there are some things you should know about the changing marketplace. The dream partnerships of the future depend on how assertively you demand improvement in the following areas:
Architecture. Proprietary products are dead. As the industry moves toward technological standardization, the new service provider must articulate what systems architectures it will support.
Such a public declaration gives niche product developers the information they need to build products that complement a bank's main system.
Banks will then be able to customize their systems by selecting the set of products that best meets their strategic direction.
Standardizing benefits vendors as well as banks. As computer makers have discovered, moving to standards-based designs has increased, not decreased, their business.
Integration. Historically, providers such as Electronic Data Systems Corp. and Alltel Information Systems Inc. have been known for their ability to integrate disparate products and services into one product supported by a single vendor.
However, integration will soon mean having the ability to provide standard architectures compatible with the products of any other vendor. Such uniformity would eliminate the need to build custom interfaces for each product to coexist with core products.
In fact, by allowing and encouraging other suppliers to build products for them, new providers will find they can offer an even more robust core product. And banks will finally be able to select the suite of products that best fits their needs and to run them together as one product.
Infrastructure. It is not uncommon for a bank to spend 25% or more of its information technology budget on personal computers, networks, and related expenses.
Many banks have discovered that PC technology requires more staff support than dumb terminals connected to a mainframe. As a result, many have turned to third-party suppliers to design, install, and support their PC networks.
This is an area where banks are most likely to run into vendor partnership problems.
Since PC hardware often comes from a vendor other than that supplying the bank's core processing services, partnership problems are common. If the bank-vendor partnership is like a marriage, then in essence the PC vendor becomes a second wife or husband. Banks often can get caught between finger-pointing vendors when problems arise.
Banks can close the partnership gap by demanding that their partners address their need for quality, value-priced services that meet all their infrastructure requirements.
Business solutions and contract services. Successful partners will focus on the impact that technology can have for their client rather than on the technology itself.
Today, banks lament that vendors bring forth the "latest and greatest" product with no clear strategy for ensuring financial benefit to the client. In the future, successful vendors will provide not only a new technology but also the business process, implementation plan, project budget, financial justification, and client case study to illustrate a product's real business benefits.
As core system revenue continues to decline, vendors also will be looking for new roles to fill and additional services to provide - some of which will be nontechnical.
Research. Traditionally the goal of research has been to make existing software run more efficiently in order to improve margins for the vendor.
Though that objective will continue to be important, research must be broadened to offer banks the vision not only to invest properly in hardware and software but also to know what third-party products are best of breed, what new services are becoming mainline, and what bank customers are requesting.
In essence, vendor research will be focused on how to make customers more competitive in today's marketplace.
Risk management. Serviced banks have not been too concerned in the past with data risk management. The vendor's data center contained the processor, and all data important to the bank were at the vendor's site.
As new technology has been deployed, data bases with critical information now exist at one or more bank sites.
To live up to their role in the partnership, vendors must expand their thinking to take responsibility for all data within the enterprise.
*
The future of the service provider industry lies in the vendor's ability to form working partnerships with its customers.
However, these bank-vendor partnerships, like marriages, require both parties to work continually at making them succeed. If any change is to take place, it's clear that banks must take the lead in developing the partnership by demanding better service.
It is absolutely essential that banks and vendors discuss their expectations of partnerships and specifically define the relationship under contract. It's time to define what "partner" means so that future relationships have a reasonable chance of success.
Mr. Faulkner is managing director of M One Inc., a Phoenix-based consulting firm specializing in bank management and technology. The first article in this series was written by two of his colleagues there and appeared April 26.
