Artisan Unfiltered #10: Core Financial Technology 101

“Core Financial Technology 101” features an interview with Stephen Heckard and Matt Bergman – the two newest additions to the Artisan team. Steve and Matt are leading Artisan’s newest practice, Core Financial Technology Consulting, which focuses on generating more favorable contract outcomes from a highly competitive core vendor assessment process. They are are both deeply knowledgeable technology solution professionals with decades of experience in selling and evaluating core processing service programs for banks, credit unions and non-bank financial institutions. Moderated by Artisan’s co-founders, Jim Adkins and Jeff Voss, “Core Financial Technology 101”  explores the state of the core vendor industry and how it’s impacting financial institutions’ readiness for the challenges of an increasingly complex technology-driven future.

Transcript

[00:00:00] jim-adkins_1_08-22-2023_163808: Welcome to Artisan Unfiltered, a series of podcasts that focus on current topics in the banking industry. Today's discussion will focus on our new service offering, Core Financial Technology Services. My name is Jim Adkins, I'm here with my co host Jeff Voss, and two of our esteemed partners at Artisan, Steve Heckert and Matt Bergman.

Steve and Matt are deeply knowledgeable technology solution professionals with decades of experience in selling and evaluating core processing service programs to financial institutions. Including bank banks and credit unions. They both have principal roles and artisan advisors core financial technology practice, which among other things focuses on generating more favorable contract outcomes from a highly competitive core vendor assessment process.

Matt has worked with leading providers of technology solutions in the financial industry throughout his 25 year career, notably Fiserv, FSI, and Examine. His experience from the vendor perspective allows him to bring invaluable insight to the contract negotiation and renewal process. That translates to strong results, including more competitive rates and improved service and support for artisan clients.

Steve is a noted specialist in financial technology with extensive experience in IT strategic planning, conversion planning, and operational assessments. His background in financial technology services with companies like Fiserv and ProBank Austin, which is now Forbis, uniquely qualifies him to assist institutions in their review of processing systems and contract negotiations.

Steve serves on the industry advisory board for BWG Strategy, which is a resource for tracking real world trends in technology, media, Telecom, e commerce, consumer, retail, payments, and adjacent sectors. Gentlemen, welcome.

[00:01:49] steve-heckard_1_08-22-2023_153808: Good afternoon.

[00:01:51] matt-bergman_1_08-22-2023_153808: you.

[00:01:52] jim-adkins_1_08-22-2023_163808: Um, one thing that Jeff and I wanted to talk about a little bit as we just kind of jump into this topic here is how things have changed in terms of, uh, core technology and what types of systems your banks are running on. It used to be... In the old days, something that maybe the C suite wasn't that interested in, you know, it's like almost almost an operational thing.

But Steve, in a conversation that you and I and Jeff had a little while ago, you said that's now a strategic priority. You want to expand on that, please?

[00:02:27] steve-heckard_1_08-22-2023_153808: Right, right. And some of that's driven by the pandemic. I believe quite a few banks previous pandemic had recognized the strategic value of tech. But during the pandemic, when many banks had to close their branch offices, their main office, technology was the only way they could continue operating and continue to have contact with their clients. Then tech's importance was across the board with every size of bank. And every bank has since then elevated tech's importance. That Coupled with since the pandemic, I don't know if I've seen more turmoil in the core vendor industry than we're facing today. So at a time when tech and the importance of technology has never been higher.

The service and support of that by trusted providers has never been less. So it's, there's, there's a lot of dynamics here.

[00:03:39] jim-adkins_1_08-22-2023_163808: Why? Why is there turmoil in the in the provider space? What's what is going on there? I know you've talked about it. It seems like there are a lot of a lot of noise going on with the providers. What's what's your thought on that?

[00:03:53] steve-heckard_1_08-22-2023_153808: So a variety, uh, a variety of issues, uh, acquisitions, most of it's been acquisitions, cause companies to pivot on their strategy, to move their focus away from core. into payments. I think that's impacted at least two vendors. There's been an acquisition. There's been, there will always be acquisitions, but uh, there's been turnover and pandemic for some firms indicate it has resulted in them not able to retain staff. not every firm that I've talked to recently, but over the last two years, I've heard that excuse, and I don't know, maybe there's something unique with that firm that causes that to be a bigger issue, but it, you know, that's, you're always going to have personnel issues like that as, as staff ages out and retires and moves on, you're always going to have that, but it seemed to be exacerbated by the pandemic.

At least in a few firms,

[00:04:55] jim-adkins_1_08-22-2023_163808: What's your thoughts on how strategy now is? Is it is the core to core vendor vendor decisions? It's more strategic. What's your thoughts on that topic?

[00:05:07] matt-bergman_1_08-22-2023_153808: You know, I, I agree with what a lot of Steve say. And I also think when you think about some of the, some of the big core providers, they have multiple products, right? So that's going to cause some turmoil. That's going to cause some changes in the, in the industry. And, um, you know, let's be honest as more and more banks start to, uh, to go away with acquisitions with mergers and acquisitions on the banking side, you're going to have to start to see.

Use that word sunset, but you're going to have to start to see that happening real, real soon, uh, which is going to create more and more and more turmoil, um, which creates issues with service kind of just goes across the channels. This, this, uh, it's a downward spiral.

[00:05:50] jim-adkins_1_08-22-2023_163808: Jeff, you know, we've been in and out of this topic. You know, you're, you're probably closer to this topic than I am with your past operational and CFO experience. But what about, you know, we've talked about cloud, the cloud and how this plays into this. What, what do you, what do you think the future of that type of. Activity in core processing and vendor processing. Do you see that? At one time, everyone was saying, Okay, this is the this is where it's going. Everything's going cloud. You know, what do you see with that now?

[00:06:25] steve-heckard_1_08-22-2023_153808: well, three years ago when fifth third announced they were moving from their bespoke data center to F. I. S. is modern banking system. It's a next gen core or cloud based core system. After that, it was like dominoes. There was a headline every week, and I want to say a little bit of it was click bait. It only applied to the very, very largest of banks in the U.

S.

[00:06:55] jim-adkins_1_08-22-2023_163808: Yeah.

[00:06:56] steve-heckard_1_08-22-2023_153808: There's not a successful community bank vendor today that is processing in the cloud. If you look, though, at the definition of cloud, You're just outsourced.

[00:07:08] jim-adkins_1_08-22-2023_163808: Yeah.

[00:07:09] steve-heckard_1_08-22-2023_153808: And, and, and that's, that's the solution that community bankers have, have focused on for the last 10 years. In house is disappearing. Outsourced.

Does it make any difference if it's outsourced in a computer room or in a server array at a data center? In either case, it's no longer in your operations. So, you know, a cloud has some technical capabilities that the big iron installation doesn't, it's easy to expand. It's elastic, uh, things of that nature, but a well run data center.

Never clients of that data center never had those issues if they acquired bank. If, if the data center needed to add additional processing capacity, they did. They didn't have to worry about it. So I think it will eventually trickle down, but it's got a long time before it's going to be brought down to the small community bank market.

[00:08:12] jim-adkins_1_08-22-2023_163808: Jeff, what do you think about the regulatory opinion on that? That cloud issue? Do you think the regulators are? Are they pushing that? Did they want to see that? Or are they just going to sit back and see where the industry goes? Because there's certainly a lot of security issues there and operational issues, I would think,

[00:08:30] jeff-voss-55ia_1_08-22-2023_153808: so let's, let's define what, again, working off of what, what Steve said, um, there's two elements out there. There's the core system that's being processed and then there's your internal networks, right? Who's, who is processing those, those, those internal networks. Um, I'm seeing more of our client base, uh, to partner with the core provider these days in outsourcing their internal networks and basically turning over the entire kit and caboodle to the, I mean, the core provider saying, look, you're much better at this than we are.

Um, we don't want to deal with the, the examination issue. We can't hire the staffing. And keep those staffing current. You're a technology provider. You're going to hire the best and the brightest. And for us, we want to give it to you. Now, what, what I've seen as a result of that in a couple of our clients has been increased regulatory scrutiny over the, over the bank itself for basically turning over those decisions to the core provider and their monitoring of the core provider.

So they thought they were getting away from. A lot of that, that regulatory scrutiny, and in fact, that's not actually happening, that the regulators are still beating on these banks to track what's going on with the core provider and make sure they're reviewing reports with their core provider. So they still have to have somebody in their bank that understands technology.

And there's a whole service related issue that Steve brought up. I, I, I'm also seeing that. Um, in a couple of situations where they're just, the banks are not happy with the performance of the service providers that, in fact, it drove one bank to leave its core provider to go to another core provider, which, which surprised me, that was the reason for it.

[00:10:40] jim-adkins_1_08-22-2023_163808: you know. Uh, question. I had just a changing, uh, getting away from our regulatory friends, not that I, I don't love our regulatory friends, but we'll, you know, we talk enough about them on these podcasts. So we'll, we'll move away from them a little bit, but things are moving so fast. Jeff, you know, you, you. Oh, he's telling me, you know, about fintech.

I know it's something that you're very interested in. Um, you know, can a question I have for everybody is can these core providers are they keeping up from a fintech perspective in terms of advancement technology and how are they dealing with fintechs? You know, what, what are these core providers, what's their fintech strategy?

I guess this is a good question because it seems like there's fintechs everywhere. They're like apples on the ground. They're all over.

[00:11:30] jeff-voss-55ia_1_08-22-2023_153808: Matt, you may want to take that if you can.

[00:11:33] matt-bergman_1_08-22-2023_153808: Um, yeah, so the way I,

[00:11:37] steve-heckard_1_08-22-2023_153808: Silence.

[00:11:37] matt-bergman_1_08-22-2023_153808: I look at it as I remember talking to a customer of mine, um, back at FIS and having a conversation, just general conversation, like we're kind of having right now. And, and I remember him asking, Oh, I was talking about the, the Apple card, right? The Apple credit card and being able to go right to my phone.

You see the commercials now, right? You see the commercial where they go, these guys standing in line. He orders, he orders the, he orders the credit card gets approved. He pays for it as he's walking out the door. Right. We've all seen that. So that to me is the, is the ultimate, right? The ultimate ease of use had that in seconds, but then I also look in as the four of us are having a conversation, all business owners.

I wouldn't take that ease of use, sending a 60, 000 wire out, right? So where does the, where's the line draw to make that, to make that happen? Yeah. I want, I want that ease of use of being able to have that card in my, in my. I'm on my phone within, within seconds, I also want that security of, of my community bank, uh, that, that I banked with of when I sent out a 60, 000 wire.

I know it's, I know it's legit. I know it's going to the right places. So I think it's a fine, it's a fine line, um, of where that is. Um, it's a, it's a struggle, right? It's a, it's a, it's gotta be a struggle every day. Um,

[00:12:59] jim-adkins_1_08-22-2023_163808: think it, you know, it relates back to just, um, efficiencies and, you know, banks struggle with, you know, they want to use technology to be efficient. But at the same time, you know, how does the, you know, how does your basic branch still play into how you deliver products? And like you said, Matt, I mean, it seems like banking is, we're all trying to find that sweet spot of technology and hands on, hand holding.

Some customers want, like you said, if I'm sending 60, 000. I almost want the banker to put it in his car and drive it there. I want to make sure it gets there, you know, but yeah, how do you, it's a challenge for a we bankers to find that line of technology and efficiency, but at the same time, you know, do the customers want, you know, maybe sometimes they want more safety, more, you know, other things other than efficiency.

They just want to have a peace of mind about a transaction. That that's a, that's a tough area for, for our bankers right now.

[00:14:01] steve-heckard_1_08-22-2023_153808: And I think smaller community banks, by and large, are looking to their core vendor. To help them along that digital journey with fintech. Unfortunately, I think they're going to be disappointed. And I think they won't realize that's not occurring until let's say five years from now. seen, okay, there's dozens and dozens, hundreds of fintech solutions out there.

Not all dealing with payments. Not all dealing with actually interfacing with, uh, the bank's clients. A lot of that is internal. You can lubricate a process and make it much more efficient and so forth. That's still FinTech and it's beneficial to the bank, but I don't, you know, there's a wonderful loan origination systems out there today that is new technology and some of it is in fact in the cloud, but court vendors are not going to take their clients into those systems unless they have in fact purchased that system, you know, and they're not developing, I don't see.

I don't see the development work there. I'm concerned about this. I'm concerned about the fact that I'm seeing my, my clients are talking about a downturn in support and service because of personnel issues. If that's occurring, what does that say about product development, which is unseen until it's released?

Okay, you've got a big major release in June and you get to see what they've been working on for the last two years. Okay, and I know one major project that has been shelved earlier this year that has been talked about by a major vendor for at least two to three years. It's no longer, it's no longer going to be installed.

And I just had a client emailed me this morning, questioning their vendor, who's sunsetting their digital banking solution with their, what they're able to provide, and they're all terribly confused. So I don't know if the core vendors, if that's even in their vision of being able to support to their banks.

In moving them forward with FinTech outside of their own solution set. I don't think that will happen. I would like to be proven

[00:16:21] jim-adkins_1_08-22-2023_163808: Yeah, I mean, Jeff, you were, you were talking, Jeff, about, you know, the whole topic of fintechs and partnerships with the core, uh, you know, what, based on what Steve said, what, what are your comments on that, what are your feelings?

[00:16:35] jeff-voss-55ia_1_08-22-2023_153808: I'm, I'm, I'm seeing that those same challenges. Steve and Matt, that the fintechs can create, um, a wonderful product out there and it, it's a program. Uh, but if they can't hook up efficiently and effectively with the core, I, I think these companies, this capital that's been used to develop the software goes nowhere.

And these, these fintechs, many of 'em are gonna die on the vine.

[00:17:09] steve-heckard_1_08-22-2023_153808: Right.

[00:17:10] jeff-voss-55ia_1_08-22-2023_153808: maybe there's banks out there that will. Provide banking as a service for some of these fintechs, but that's, there's a risk there for the bank in doing that and taking on that software product and running accounts and transactions through their own balance sheets and income statements, it, it, it definitely has to be looked at very carefully.

And I think that's where the regulatory scrutiny will come into play down the road. I, I like you though, I'm very concerned that Uh, the big, the big players out there, you know, they, they're like the Titanic, right? I mean, or a big, a big ship. It takes a while to turn and these fintechs are just cranking it out and they're ready to go within a very short period of time and they want to go and, you know, it's not going to happen like that within these large bureaucratic organizations that have controls in place because of regulatory demands. don't think it's. This could be a good thing for banks.

[00:18:17] jim-adkins_1_08-22-2023_163808: Yeah, so I'm probably the least techie person on this call here on this podcast, but, um, it seems to me that a lot of the fintech stuff that we've seen, we come across quite a bit and we're doing strategic planning for our clients. And, and of course they, they want to include a fintech options and things like that to get to their, get to their clients and better deliver a product or make something better in the back room.

It seems sometimes though, And maybe I'm wrong, but it seems sometimes the FinTech developers, the people that are doing, especially on the origination side, on the asset origination side, the service side, uh, there, many of are not bankers. And so it seems like there's a, there's a disconnect between, you know, their product and how they see it.

And then when they start talking about how it fits into a banking environment, It's almost like, uh, you know, almost a, a different language. Do you, am I just dreaming that or is that a legitimate comment there?

[00:19:17] steve-heckard_1_08-22-2023_153808: You never want to be a beta tester,

[00:19:21] jeff-voss-55ia_1_08-22-2023_153808: Yeah. Yeah. I, I agree with you, Jim. I, I, it, it, it's, uh, it's a tough situation for these, these fintechs. Um, I, I, I don't know how they can, um, effectively partner. Uh, if these core providers don't snap them up and buy them, they've got so many to pick from, and,

[00:19:51] steve-heckard_1_08-22-2023_153808: right?

[00:19:52] jeff-voss-55ia_1_08-22-2023_153808: you know, I, if they are buying them, maybe they're buying them to shelve them, right?

You hate to say that, but maybe they're going to do something just to get, buy up somebody who's grabbing some market share, take them off the street, and that way they can shut, well, sunset it down and call it a day. It's cheaper for them to do that. You know, who knows? Who knows?

[00:20:14] steve-heckard_1_08-22-2023_153808: in, in 2019, I was a panelist at the, um, Lendit FinTech conference in San Francisco. There were hundreds of people, Uh, startups there. Many of them had exhibits on the floor. I was like a kid in a candy store walking around talking to all these people. And I wondered then, how many of these are going to be in business in three years?

Well, little did I know, we were just a year away from the pandemic. So I'm sure that crushed several of them right there. So the ones that are still alive have been stress tests. You know, now regulators have put out just within the last few months, a directive on working with third parties and so forth.

And ultimately, it's the bank's responsibility. You know, they're responsible for due diligence. On these third party firms, they're responsible for everything, just as though they're responsible for their core vendors information security policy, you know, that all falls under their purview. Bankers just can't go out and sign the contract with a fintech and and walk away from the responsibility.

Just no difference than when you were talking about banks outsourcing their internal network. You know, there's still a responsibility the bank has, uh, to review and to acknowledge the security and so forth. So, you know, bankers cannot outsource those basic responsibilities.

[00:21:48] jim-adkins_1_08-22-2023_163808: and it affects the whole bank. I mean, the compliance issues that you have to address and all of those things. I mean, it's such a, you know, going back to that first initial conversation topic that we had. It's such a strategic issue now because it's so, you know, if you're, you're going to deliver. A product through a fintech solution, you better have your, your, your strategy lined up so the regulators can understand it and you better have from a compliance standpoint, operational standpoint, you've got to have your, your ducks in a row as well.

It's, it's. It's pretty interesting how, how all inclusive it is.

[00:22:24] jeff-voss-55ia_1_08-22-2023_153808: So, so what, what comes first in this chicken and egg thing? Is it the strategic technology plan? Or is it a larger plan, and then you try to drive technology through that strategic plan to deliver your product and services. How, how would you recommend clients. Uh, integrate with an overall strategic plan of an entity, the technology needs.

How do they go about that?

[00:23:01] steve-heckard_1_08-22-2023_153808: Quite frankly, I don't know how some of them do go about it. I, I, I believe they need to identify their needs. First of all, what are the areas of concern? What areas? You mentioned loan origination, and you know, there's, there's some systems that are aging out. You can probably look at some of these systems and know that sooner or later, and probably sooner, it needs to be replaced.

And that floats to the top of the list. But, okay, those, those mandate changes. What about the discretionary changes? We want to add a new delivery channel to our digital customers and so on. no one says you have to do that, but. Where are those needs at and prioritize those needs within the bank and then begin to look for the solutions.

There may not be one for everything and it may not be affordable. That's the other side of it right now because many of the fintechs are looking for the very top size banks. Of course, they want, they want the big contracts to come in. Do they want to take on an 850 million bank?

[00:24:08] jeff-voss-55ia_1_08-22-2023_153808: Right.

[00:24:09] steve-heckard_1_08-22-2023_153808: I don't know if they're even marketing to banks of that size.

[00:24:13] jim-adkins_1_08-22-2023_163808: Interesting. Yeah. I mean, I think that, you know, we do a lot of strategic planning, Matt. And, um, to me it just, the way I look at it, it's so important to know who your customers are, what you're trying to do, who you're trying to go after. Because there's so many FinTech solutions, there's so many shiny toys out there.

That if you're not really comfortable knowing what you want to do, what you want to, what you want to, what solutions you want to provide your clients, you could go off, you could go down rabbit holes real quick, you know, something looks fun and it looks really cool and, and say the CEO is kind of a techie guy that likes gadgets and things like that.

How does that really affect the strategic vision of the bank? And to me, I'm just wondering, you know, our banks, you know, looking at that, like, you know, how does, how did all these solutions, there's thousands of them, how do we make sure that these solutions are really fitting in with our, you know, what we want to be as a bank?

 And the way I look at it is, if you don't have your strategic plan set in place and understand what you want to do, you could go down a lot of rabbit holes and, and find FinTech solutions that are really, they might be cool and fun, but they're not accomplishing what you want to do.

And how do, how do banks make sure that doesn't happen? And that's for anybody. Matt, Steve, Jeff, what do you all think about that?

[00:25:43] matt-bergman_1_08-22-2023_153808: I think it becomes a, you know, then does it, does it integrate or even interface back into your core, right? Can it even, can it even touch your core? Um, Steve, and I know, I don't want to mention the bank's name, but I know, you know, a community bank that's doing double digit, he's got double digit of FinTech, uh, relationships. if I'm not mistaken, he only has one of those touching the core. So he has less than

[00:26:11] steve-heckard_1_08-22-2023_153808: right.

[00:26:12] matt-bergman_1_08-22-2023_153808: touching the core solution, which I think, obviously somebody figured it out, right? So somebody's figured out that he's, he's had that direction. He's had that strategy to move forward with those FinTechs and figure out how to do this.

[00:26:26] steve-heckard_1_08-22-2023_153808: There are processes that can automate workflows within a bank make a bank so much more efficient in areas that were so manual intensive, and there's areas like that. It doesn't need to be. Interface to core,

[00:26:42] jeff-voss-55ia_1_08-22-2023_153808: Sure. Yep. Nope. And I, I'm running across that, that situation now with a couple of clients of ours where the manual processes are obviously human, human generated, and potential for error is high. And when errors occur, uh, the, the errors are usually significant. They're viewed as a, as a huge negative on their internal controls and whatever.

And we're encouraging them to, uh, work with, um, some partners of ours that are focused on, uh, doing these manual processes in order to make them not, not just more efficient, but accurate. So that the error rates are cut down in a significant way that are causing some of the issues. Um, and ironically, I'm getting resistance from the client, um, saying, you know, no, we, we trust our manual processes, you know, and I'm like, I don't know how you trust a human, you know, if you can, if you can repeat, if you can repeat the process over and over and over, and if, if through AI, the process can learn, you know, and be able to develop its own set of checks and balances to protect the institution.

Why would you ever want to turn that process over to a human? If it's, you know, if it's this repetitive checking process or whatever it might be. Um, yeah, I, I totally get what you're saying.

[00:28:28] jim-adkins_1_08-22-2023_163808: You know that you,

[00:28:29] steve-heckard_1_08-22-2023_153808: I don't know

[00:28:30] jim-adkins_1_08-22-2023_163808: mentioned a,

[00:28:31] steve-heckard_1_08-22-2023_153808: it's AI.

[00:28:32] jim-adkins_1_08-22-2023_163808: ahead, you know what, Steve, you're asking the same, go ahead, you're probably asking my same

[00:28:36] steve-heckard_1_08-22-2023_153808: well, AI, AI, you brought up the wild card and who knows where that's going to go. But even today, there are very good workflow management solutions. That nearly every core has them built in, some of them additional charge, and in many banks, they have seldom use them to the extent of the efficiency they provide beyond that, those robotic process automation, it's a higher level and AI hasn't infiltrated that yet, but I was just reading on this past week, and that's the next thing within RPA, one of those companies is UiPath and UiPath and UiPath. Large firms have used that to basically automate manual tasks. It's really, you know, it's really defined. Any definable function can be

[00:29:27] jeff-voss-55ia_1_08-22-2023_153808: Yep.

[00:29:28] steve-heckard_1_08-22-2023_153808: and virtually everything in a bank is definable.

[00:29:32] jeff-voss-55ia_1_08-22-2023_153808: Yep. Agreed. Agreed. So, I'm gonna, I'm gonna go back to our previous question about, you know, from a strategic perspective, Jim, you laid out, develop your strategic plan, then, at least is what I heard you say, then, then try to find those core or FinTech solutions that will allow you to provide those, those basic services.

We, you know, banks historically, I think, have relied on their core providers for products and service delivery mechanisms, not entirely, but, but, you know, a significant part of their service offerings. Trying to differentiate yourself with the three, you know, is the number of core providers is really kind of narrowed down to a handful.

How do you differentiate yourself these days? How do you, how do you figure out how as a community bank? I've got a bank in the same town that's operating on the same system. We all offer the same products and services. How do we differentiate ourselves? Is it purely, you know, service? Or, or what can we do?

I mean, that's where I thought perhaps FinTech could add a component of differentiation. But not if the, uh, core provider is not going to allow it to hook in.

[00:30:58] steve-heckard_1_08-22-2023_153808: Well, they all have APIs. Okay, they all have a catalog that can look at. And I've gotten to a couple of projects where we got pretty deep into that. And APIs are out there from every vendor. They all have a cost. Okay, so it's not free. It's not free. And depending on the vendor, you know, it's per asset size, per click, things of that nature.

So. The vendors will be happy to have you plug something in, but don't expect the vendor to do it for you. You better have the technical expertise on hand and, um, be able to get through that installation. That's, that's an issue. That's, that's a big issue for smaller community banking. Banks because they don't have that staff

[00:31:50] jeff-voss-55ia_1_08-22-2023_153808: Yeah.

[00:31:51] steve-heckard_1_08-22-2023_153808: and, and I think that might hold back the installation of these solutions.

I'm even seeing at the core provider level, they have the solutions. They can't install them in a timely basis. So do they have a solution if they can't get installed? Do they really have a solution?

[00:32:10] jeff-voss-55ia_1_08-22-2023_153808: That's a great point. Yeah. Now I'm seeing that too with some of our smaller banks that are, are, have gone through, they're going through a in house to outsource solution with a major provider and their resources, the internal resources, just from doing that are so stretched, they can't get done the basic functions of their, of their operational goals.

Uh, bank operations and some of their financial functions. And as a result of that, you know, they're calling us saying, we need you guys to help. We need you guys to come in and help, help not implement those solutions, but help do the basic functions of the bank that we can't get to. Which, you know, I don't know what that says about the, the core providers in this case.

Um, I, I, I feel bad for them, but. And you're a small bank. I don't know how you ever were on an in house provider, or you were an in house provider of services and expected something like that to continue on into the future. It just amazes me.

[00:33:26] matt-bergman_1_08-22-2023_153808: I

[00:33:26] jim-adkins_1_08-22-2023_163808: Matt, what do you, you know, okay, let's assume I'm a CEO and, um, you know, I'm, I'm worried about my technology. I want to know if I'm, you know, up to date. What's my, what are my potentials? I've, I've got an idea of my strategic plan. I have a good idea of my customers. What, what's the first step in when I ask you a question?

I'm the CEO. I call you Matt. Uh, come on in. What do I do? What's my first step to kind of figure out where I'm at? When it comes to technology and my bank's use of it. How do you, how do you go about that when you assess that initial, uh, visit?

[00:34:07] matt-bergman_1_08-22-2023_153808: You know, I think a lot of banks will have a handle on it because it goes back to the conversation we had earlier to start to start this, this, this, this off today was bank CEOs now know what core means right? 20 years ago, they could care less. But when it's your second largest, usually second largest, not interest expense, you usually know what, who that, who that provider is.

So I think from a most simple, they had their handle on that technology. I think where it comes down to Jim is that Is that where's that future lie, right? Where does that not only the future, but three years, five years, where does that, where does that lie? Where does it want to be? Where do you want to be, uh, from, from a bank's perspective and how do you get there?

Um, FinTech, you know, as a community bank, I think in a FinTech world, you're looking at your core provider. I think you're looking to your core provider, but we had a conversation earlier and. We talked about how they're all struggling. Um, I think some of maybe the smaller core providers are struggling as much.

I think that maybe they're having a little more success getting some of these things installed. Um, but then it comes back to, I think it's, it's, it's a full circle with conversions, you know, Steve, you, you know, this conversions are being quoted for two years out to out, out right now, 18 months out, two years out, we, you remember going to the table where we had to get conversions done in nine months, seven months.

Right. So I think there was just a, just a. A lot of things that, that go into this decision, uh, from, from that perspective

[00:35:39] jeff-voss-55ia_1_08-22-2023_153808: if you had to, um, give advice to your clients in terms of a time frame to, Evaluate those strategic needs, which may result in a change in the core processor. What, what kind of a time frame are you looking at these days? Should they start a year ahead of their contract, two years ahead of their contract?

I'm seeing a hand pop up there, but two?

[00:36:10] matt-bergman_1_08-22-2023_153808: to a minimum

[00:36:11] jeff-voss-55ia_1_08-22-2023_153808: Yeah.

[00:36:12] steve-heckard_1_08-22-2023_153808: To a minimum, right? I think they have to have a decision made least 12 months in advance of the expiration date. I'm talking to many core vendors right now. I'm involved in a few core evaluations. And with every one of them, no, not every one of them. Some of them have been so successful in the past two to three years, their conversion calendars are full a year in advance.

That's very unusual. That shows the turmoil, though, in the market. And that shows lack of service and support. These banks are coming from somewhere, right? Some of these providers have never been this busy. And they've got a long history. They've never had one of them just announced her most successful year ever.

It beat last year as their most successful year ever. Now, when you compound that by thinking that we have fewer banks today than we've ever had, that's just amazing that they're putting up the numbers that they are. Granted, the average size of banks a little larger, but if you look strictly at the metrics in the number, Of banks they've signed regardless of the size, you know, it's just huge.

It's just huge and I Large vendors small vendors. There's some of them obviously That don't fit that category because these new clients have to come from somewhere

[00:37:40] matt-bergman_1_08-22-2023_153808: they're on the other

[00:37:41] steve-heckard_1_08-22-2023_153808: nearly any de novos, you know, the de novos have just there's a few out there. That's not making anybody's, you know bank on that so um Yeah, I think you know as as vendors they need to know if they are Aligned, or banks need to know if they're aligned with their vendor. They need, first of all, their vendor needs to understand them, and so few very do. But they need to understand where their vendor is headed.

[00:38:09] jeff-voss-55ia_1_08-22-2023_153808: Sure.

[00:38:11] steve-heckard_1_08-22-2023_153808: Are they headed in the same direction that bank is headed? And, and, and then, then you get some idea, do we stay or do we move?

[00:38:22] matt-bergman_1_08-22-2023_153808: or do we stay and change cores within the same provider we're on today? Right. Did

[00:38:27] steve-heckard_1_08-22-2023_153808: happen

[00:38:28] jeff-voss-55ia_1_08-22-2023_153808: I mean, so this

[00:38:29] steve-heckard_1_08-22-2023_153808: Yeah, Matt,

[00:38:30] jeff-voss-55ia_1_08-22-2023_153808: this is all part of, this is all part of our, our service offering, obviously, where we can meet with banks, uh, walk through their strategic technology program and help them assess where they're at in the process, should they be looking at something else, um, you know, sure,

[00:38:51] steve-heckard_1_08-22-2023_153808: It doesn't have to be driven by expiration

[00:38:53] jeff-voss-55ia_1_08-22-2023_153808: sure,

[00:38:54] steve-heckard_1_08-22-2023_153808: We can help them chart a course into the future. There's no doubt about that. And you know, there are other consultants out there, but I think the one thing unique is Matt and I are not an island of technology and industry expertise. We're surrounded by subject matter experts in almost all facets of bank management at artists and advisors,

[00:39:17] jeff-voss-55ia_1_08-22-2023_153808: right,

[00:39:17] steve-heckard_1_08-22-2023_153808: you know, and the integration we've been talking about of technology, even up into the boardroom today. We play right into that. We've got it all covered.

[00:39:30] jeff-voss-55ia_1_08-22-2023_153808: No, I, I, I would agree with you. I, I, I do think the, uh, the community banks need help. They absolutely need help. Um, I see many of them struggling today with these, these strategic decisions. Um, they, they put the strategic plan forth. They want to do X, Y, and Z. And then when they turn to their, to their core provider, uh, or, Look at the technology options to be able to support those, those desires.

It's just not there. They can't meet those expectations. Um, so I, I certainly understand what Jim is saying about, about, um, you know, putting your strategic plan first, evaluating your customers needs, what they're looking for. Um, but it is somewhat of a chicken in the egg game, right?

[00:40:28] steve-heckard_1_08-22-2023_153808: Okay.

[00:40:29] jeff-voss-55ia_1_08-22-2023_153808: You, you, you can want it all you want, but if you're hooked up with the wrong guy for seven years, you may never get to be able to do what your, what your clients would like you to do.

And that's, that's a concern. I think some of these banks have it. We actually have one client that recently converted from a very large processing company to a smaller processing company, and I think is now regretting that decision. They have said, you know. It was bad where we were at, but it was an animal that we know now.

Now that we're with this new company, we don't know half of what we're missing here. And it was a tough conversion for them. Um, not so much on the core side, but all the digital, uh, assets that are, are digital programs that go along with it. The internet banking pieces, the commercial banking pieces. Uh, wire transfer, you know, all of that stuff.

[00:41:33] steve-heckard_1_08-22-2023_153808: It's a huge challenge, you know, and I don't think any bank has a desire to go through a conversion. Uh, it's just so much going on. However, last year I had four core evaluations, not one of my clients renewed with their incumbent

[00:41:49] jeff-voss-55ia_1_08-22-2023_153808: Wow. Wow.

[00:41:51] steve-heckard_1_08-22-2023_153808: Okay, so, so there you go. That tells you it's happening. That's what, what I see worse.

And, and it's a challenge to every bank manager. Don't let yourself get in a situation where you don't feel your staff can withstand a conversion.

[00:42:08] jeff-voss-55ia_1_08-22-2023_153808: Sure.

[00:42:08] steve-heckard_1_08-22-2023_153808: You know, don't fall into that trap. And I've had that expressed to me. More than

[00:42:14] jeff-voss-55ia_1_08-22-2023_153808: Sure.

[00:42:15] steve-heckard_1_08-22-2023_153808: that, you know, we, we just can't do a conversion.

[00:42:18] jeff-voss-55ia_1_08-22-2023_153808: Sure.

[00:42:18] steve-heckard_1_08-22-2023_153808: Well, why can't you, you know, you, you have to ask that question.

What changes do you need to make? Not that you ever planned to go through a conversion, but you're limiting your strategic plans at that point by not allowing you to go through a conversion. So those are challenges that bank management has to understand.

[00:42:39] jeff-voss-55ia_1_08-22-2023_153808: Yep. Well, gentlemen, we, we've hit our, our time limit. Uh, I, I want to thank you both for, uh, number one, joining the firm and being part of us and, uh, being willing to provide. Services who are our clientele. I think we're looking forward to getting that up onto our website here in a very short period of time and introducing you to all of our clients because they I think you can add value to their to their whole whole business operation from a strategic perspective and even even from an operational and tactical perspective.

Again, this is, uh, if any of our clients listening to this or prospects, uh, would like to, uh, make a call or talk to Jen or myself or Matt or Steve, feel free to go to the website. We'll be able to get our contact information and, uh, get ahold of us there. Um, but again, we, we thank you for, uh, taking the time to listen to this podcast on core financial technology.

And we look forward to, uh, talking to you guys and seeing you again, hopefully very soon, face to face. Thank you again.