Art Gillis, a seasoned banking technology consultant presents his latest “Automation in Banking” report (#31!), which looks at the US core banking and ancillary software market!
I am pleased to report the state of technology in banking because this is about what is, not what might be in the future. Therefore, the reader should know early on that the report covers the year 2015, not 2016. I’m not so pleased that the last positive edition of this report reflected the beginning of a downward trend in the successes of the banking technology business, and it continues.
In 2005, 755 financial institutions acquired a new core system. Now, the norm is 218. It’s difficult to be positive when the numbers are going down, even though words of many others are claiming a robust future.
This report is about core applications as well as ancillary applications. Core includes four pieces:
- all deposit applications;
- all loan applications;
- financial data related to the bank (general ledger and financial statement rendering);
- customer database (now a popular IT solution referred to as KYC by the regulatory agencies).
There are 26 categories of ancillaries (but hundreds of brands). Put these categories together, with hopefully an integrated infrastructure, and you are ready to process transactions, thousands per day or billions per day. To say that “Automation in Banking 2016″ is like no other report ever published would be a lie. I do not read other reports, but I know what was included in the 31 editions of the reports that I produced. There’s a huge difference between #1 and #31, but in the past ten years, the differences were in the details. 83 exhibits, 55 vendor profiles and over 300 IT solution profiles provide the details.
Five companies still occupy the space known as top core vendors: FIS, Fiserv, Jack Henry, D+H Corporation (soon to merge with Misys) and Computer Services Inc (CSI). These companies got their label in the 1960s because core was all there was. They now offer core plus ancillaries.
If you’re looking for a sixth top core vendor, you won’t find it. But there are nine other companies in the US that do what the five do, but with much smaller numbers. Don’t worry about their survival. FIS doesn’t want them. Fiserv and Jack Henry don’t need them. And D+H has just been bought by a private equity firm. CSI is happy where it is. I don’t believe the nine are looking for an acquirer.