How the Top Bank Tech Vendors Tackle the Innovator's Dilemma

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The pace of innovation in banking presents a classic dilemma for the industry's major technology vendors.

On the one hand, some financial institutions are disinclined, or perhaps feel unable, to upgrade to a modern core system. They rely on the vendors to help them use antiquated systems in such a way that they at least keep up with the times.

But the vendors say they know that while maintaining those relationships they have to keep an eye on the horizon for looming transformations.

Here, in their own words, is how the leaders of the top three vendors in the FinTech Forward top 100 approach the Innovator's Dilemma. (The following has been edited for clarity.)

N Ganapathy Subramaniam

N Ganapathy Subramaniam, head of TCS Financial Solutions, a unit of Tata Consultancy Services:

Yes, there will be adoption angst and fear of disruption. It is not sufficient if we hire fresh talent like data scientists, customer experience gurus but what is needed is the organization's ability to reimagine their businesses, integrate them in a team that will have the wisdom of the past.

It is the foremost task—and responsibility—of our generation to reimagine our enterprises, private and public and bring the power of technology to bear for our respective clients.

Gary Norcross

Gary Norcross, president and chief executive of FIS:

That's the question: How do we upgrade systems that are based on decades old architecture through an innovator's path, all the while looking at the historical complexities and regulations of the industry? And now you have a tremendous amount of technological innovations that are disrupting some of the concepts built over the last decades. We take a three-pronged approach. We continue to invest 5% to 6% of our revenue back in research and development; we acquire and do venture-capital-like investments in companies we see as disruptors. Those two are great for three to five years, but what about five to 10 years? For that, we run an early-stage think tank, Bold Rocket, that looks at how we get ahead of all of this.

Jeffery W. Yabuki

Jeffery W. Yabuki, chief executive and president of Fiserv:

We look at what are the best ways for us to help our clients be successful and we think that often looks like two things: opening up the systems to provide more services, more accessible information and also making sure that we are innovating appropriately on the edges, so that we are driving solid integration because the value is being created at the intersection of customer experience and data. Having banks own that value, we think is quite attractive. So we are investing in those sorts of areas and we are encouraging our clients to make decisions that make the most sense for them.

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