To the Editor:
A commentary on March 15, "As Technology Advances, Bank Service Bureaus Are Falling Behind" (page 16), made several broad statements concerning the technology found in banks using outside service providers. The authors' suggested cure for service bureau problems is to embrace non-mainframe technology or use a product like their own company offers.
Outside of the attack on service bureaus, which we think requires a response, many of their PC-based and data base technology recommendations are correct and have been implemented by banks - usually with the help of their technology providers or "dreaded" service bureaus.
Here are some facts that the writers from M One Inc. miss:
*The major bank service providers invest substantially in technology. They put an average of 10% of revenues into software development and new products - and not just in mainframes. Every provider offers a cadre of Unix and PC-based applications on an integrated basis. Several of the large companies criticized in the article sell their mainframe software along with integrated PC products to banks.
*The service providers do not ignore community banks. Several major outsourcing firms have substantial pieces of that market and aggressively serve $150 million(-asset) banks. These customers are also coveted by regional outsourcing firms and in-house system providers. A $150 million bank making a systems change is approached by more hungry vendors - including the big firms - than it has time to seriously consider.
*Banks are developing interim PC solutions not in response to service bureaus' "glacial" attitudes, but because of the support of their technology providers, whether an in-house system or outsourced. The banks have indeed found PCs and data bases are flexible tools to complement their core systems, and the majority of their solutions have been developed jointly with technology providers - usually service bureaus.
*To say service bureaus have not embraced client/server technology is especially uninformed. The same week that the article appeared, the Association for Financial Technology held a marketing and customer service workshop attended by more than 40 large outsourcers, regional servicers, and turnkey providers. The topics included the information superhighway, enterprise-wide client/server strategies and experiences, and check imaging outsourcing. Attendees read the American Banker article and were amazed at how out-of-touch it seemed.
In summary, the authors miss a key point. "Where the box is" does not make much difference. Therefore, to attack service bureaus is pointless because the same systems are often delivered to banks in other modes, including in-house, turnkey, or under a facilities management agreement. Most major technology providers cannot be pegged as "just service bureaus." Robert Jones Senior VP, business development Bisys Houston
Editor's Note: Mr. Jones is president of the Association for Financial Technology, which represents more than 60 providers of products and services to banks.