Markets go up and down, and through the latter part of 2000 and February of this year technology companies had a rough time of it. But just as we cautioned against irrational exuberance (to use Alan Greenspan's words) when the tech market was strong, we advise against despair when it's in a slump.
As always, the trick is to keep in mind the fundamentals. Technology, itself, is not a fad. It is badly needed and will not go away. That doesn't mean every gimmick is going to be long-lived.
On the other hand, we're certain that Internet banking will become increasingly important, and that over the longer term every bank will have to offer an Internet channel. It isn't easy to say what type of Internet service will become essential, or how many bells and whistles it will demand, but it will be a critical element in any bank's package.
At the same time, it seems pretty clear at this point that stand-alone Internet banks aren't going to make it. Yet, a good number of traditional banks have been highly successful in integrating Web banking into their mix of products.
The world of technology is maturing, and the clouds are clearing so that we can see which technologies will be economically meaningful and which won't be.
The result is that we're entering a period of consolidation, in which the rag-tag elements of technology in banking are being rationalized. The process is bound to accelerate, particularly as young companies find it increasingly difficult to raise fresh capital. In some cases, companies will want to broaden the range of solutions they offer. In others, they'll want to be part of a financially stronger organization that can supply them with capital and staying power, and in still others they'll be seeking a wider base of customers.
In response to this trend, with this issue, U.S. Banker is beginning a new monthly page, Tech Deals. Written by staff reporter Mark Bruno, the page will cover mergers, acquisitions and other arrangements among companies in the area of bank technology.
In this issue, for example, we look at why Intelidata, the producer of online banking software, is acquiring rival Home Account Holdings, and why 724 Solutions, the specialist in wireless products, is buying Tantau Software.
It is increasingly important for our readers to be aware of such trends so they can judge not only which products are the best, but which of the vendors have the staying power that is so critical in this rapidly changing world.