No Know-How, No Order

A few weeks ago The Bank Channel posted an article about banks getting their internet banking in order.  In the article they broke down the various barriers that banks face in upgrading their current offering.  While the list they had was thorough, there was only one problem, it didn’t include “know-how”.

There are 16,000+ banks and credit unions in the US.  I’d be surprised if more than 1% built their own IB system.  Also, going by what I’ve seen, most banks and credit unions don’t have much of a technical staff.  At most, a majority that do have technical people on staff have people that handle their core system and/or their servers and desktops.  Some may actually have a webmaster on staff.  I seriously doubt most have a software development team.

My current employer is one example of a bank that does have an in-house team.  Our E-Commerce department was formed from a software company subsidiary that was dissolved.  If not for owning that company, we wouldn’t have the expertise in-house to develop web applications.

As for developing an IB system, we have kicked that idea around.  But to be honest, we’re all working on so many other things that we don’t have the time to sit down and develop an IB system.  It was decided that the current vendors are “good enough”.  The same thing goes for new PFM systems.

One good thing about have web experience in-house is that we know, smell and can see “BS”.  Vendors’ excuses of how impossible a feature/function is to implement gets them an email of the pseudo-code of how to do it.  FYI, vendors don’t like it when you send them pseudo-code.

Now, because most banks and credit unions don’t have web developers, they are locked in to whatever their chosen vendor offers.  The best that they can do is make recommendations for features.  Ultimately, they are beholden to their vendor; and vendors know that banks don’t want to go through a lengthy conversion process.  As time goes on, it only becomes harder.   Changing your IB provider is now just as hard as changing your core because single sign-on is gaining in use.  Now if you change IB vendors, you have to make sure remote deposit capture, mobile banking, payroll systems, and PFM still works correctly.

One thing that I’ve seen is, it is really hard to develop these complex systems without a dedicated staff.  Sure, we could write the best IB and PFM system in the market, but we can’t dedicate our small staff to support these projects.  There is a reason that the majority of banks and credit unions buy their software.  In the greater scheme, an IB or PFM system is no different than the online account opening, online mortgage or commercial loan software.  In the end, all you can do is purchase the software that will best fill your needs and stay on the vendor to implement the features your customers want.