2. 2
DEFINE: “CORE & IT”
Account & Data
Processing
Item Processing
ATM/EFT Services
Internet Banking
Bill Payment
Card Services
Network (WAN)
Monitoring
Server Management /
Protection
3. Senior Vice President & Chief Information Officer
DAN DECOSTA
First engaged Paladin in
2014
Bank IT turnaround specialist
“Loves” to negotiate vs. Core &
IT suppliers. Closely follows the
Fintech industry
$2 Billion
ddecosta@BayCoastBank.com | 508-678-7641
ICBA Community Bank Service Award
Grand National WINNER
4. 4
BAYCOAST BANK OVERVIEW
Financial data as of 12/31/19
Headquarters: Swansea, MA
Founded: 1851
Locations: 30 (21 branches, 5 LPOs, 4 affiliate)
Total Assets: $2 billion
Total Loans: $1.5 billion
Total Deposits: $1.5 billion
Number of Employees: 430
5. CEO of Paladin fs & The Golden Contract Coalition
Professional Negotiator & Industry Disrupter
AARON SILVA
165 Wins / 0 Losses
$259 Million in
Cost Reduction
$132 Million in Merger
Value Accretion
Paladin Blue Book
$500 Billion + 30 years
IT Contract Negotiations
Launched June 2016
Group “Offensive”
Negotiations
100+ Institutions
asilva@paladin-fs.com 877-746-4859 x 704
6. 6
9.15% 8.77%
10.71%
0.30%
3.75%
15.08%
13.75%
19.76%
12.78%
8.67%
2015 2016 2017 2018 2019
PercentIncrease
Total Non Interest Expense Data Processing Expense
TECHNOLOGY & RISING
Technology cost rising faster than other non-interest expenses
Source: Financial Information Systems
Core IT
Solution Market
Competitiveness
Information redacted due to confidentiality limitations.
Please request full version by filling out the form, or
contact Paladin @ info@paladin-fs.com
7. 7
2019 FINANCIAL CANTOR FITZGERALD, EVERCORE AND CITADEL RESEARCH
FIS Fiserv Jack Henry
Free Cash Flow $1.5 Billion (+$37M) $1.2 Billion (-$20M) $230 Million (-$25M)
Capital Expenditures 1% of revenue 6% of revenue 4% of revenue
Product Development 6% of revenue 3% of revenue 8% of revenue
Focus • Data center consolidation
• Loud strategy
• Modernization of omnichannel
and digital banking solutions
• User experience updates
• Enhancements to platforms
• Payments integration
• Digital solutions
• Card Processing platform
migration
• Treasury management
• JHA Payments Hub
• Open banking strategy
Information redacted due to confidentiality limitations.
Please request full version by filling out the form, or
contact Paladin @ info@paladin-fs.com
8. 8
WHY ARE CORE IT AGREEMENTS SO UNFAIR?
MARKET PENETRATION: OLIGOPOLY
93%
institutions ABOVE $1 billions assets
85%
institutions BELOW $1 billion assets
American Banker May 2018
9. 9
90%
2018
IT’S NICE TO BE THE OLIGOPOLY!
Market Performance, Penetration & Control
DOW, NASDQ, S&P
68%
2012
74%
2014
85%
2016
0%
50%
100
%
150
%
200
%
2015 2016 2017 2018 2019
204.38%
164.42%
114.07%
96.24%
62.33%
55.90%
Launched in 2016
FISV 123.29
FIS 92.68
JKYH
102.38
Information redacted due to confidentiality limitations.
Please request full version by filling out the form, or
contact Paladin @ info@paladin-fs.com
10. 10
THE BAYCOAST BANK STORY
A relationship started in August 2014
2014: Partnership formed. Long term plan to negotiate three critical suppliers, reduce costs and realigned agreements
Expire 2019 Expire 2016 Expire 2016
Competitive Bid Process: Digital Insight vs. COCC Digital Banking (ACI)
Concession: COCC attempted to take-a-way internet banking. Failed. (Pocket for later!)
Final Result: Digital Insight + Bottomline survive.
All agreements coterminous with COCC. $1,986,321 Cost Reduction
Information redacted due to confidentiality limitations.
Please request full version by filling out the form, or
contact Paladin @ info@paladin-fs.com
11. 11
THE BAYCOAST BANK STORY
3 Years Later…the Table is Set – Let’s Eat!
2017: BayCoast again partners with Paladin to renew their COCC, Digital Insight and Bottomline Agreements
Situation: Bank no longer satisfied with Bottomline – they must be replaced.
Expire 2019 Expire 2019 Expire 2020
Strategy: COCC and Digital Insight fight to keep existing business and take-a-way Bottomline services.
MOBILE RATING
USABILITY
CONVERSION NIGHTMARE
ECONOMICS
CONTRACT TERMS
CONTROLLED FOCUS
GROUP
12. 12
THE BAYCOAST BANK STORY
3 Years Later…the Table is Set – Let’s Eat!
2017: BayCoast again partners with Paladin to renew their COCC, Digital Insight and Bottomline Agreements
$2,438,468 Cost Reduction
Situation: Bank no longer satisfied with Bottomline – they must be replaced.
Final Result: COCC core agreement renewed with major changes. DI renewed.
Converted BottomLine è COCC iBanking
Expire 2019 Expire 2019 Expire 2020
Strategy: COCC and Digital Insight fight to keep existing business and take-a-way Bottomline services.
Information redacted due to confidentiality limitations.
Please request full version by filling out the form, or
contact Paladin @ info@paladin-fs.com
13. 13
BOSS-LEVEL RESULTS
Playing the long game reduces risks, costs and improves supplier relationships
Total cost reduction
$4.4 Million
• 75 commercial terms modified
• SLAs improved across all relationships
• Rights of termination and exclusivity reduced or eliminated
• 25 quote checks completed over 4 years
Information redacted due to confidentiality limitations.
Please request full version by filling out the form, or
contact Paladin @ info@paladin-fs.com
14. 14
UPDATE SINCE 2019
With vendors, contracts and economics in alignment, BANK can EXECUTE ON GROWTH STRATEGY
• Expand branch and geographic footprint
• Expansion of business lines (Cannabis)
• Internal efficiency improvement
• Salesforce Sforce integration – 360 degree customer view
• Expanded online account opening options
• Partnerships with multiple fintechs
• nCino
• CBD Oil payments
• instant funding of micro loans
• …more coming
• Add 50+ employees (460 FTEs by end of 2020)
15. 15
GUESSING IS NOW A THING OF THE PAST
SERVICE LEVEL AGREEMENTS
(what you think you have)
Upload any ancillary or ‘one-off’ quote from a
major supplier.
“Buy” or “No Buy” decision intelligence within
48 hours.
Advice, direction and contract term reviews
BEFORE you sign.
Make buying decisions with confidence.
Never overpay for Core or IT services again
LEARN MORE
@ PaladinQuoteCheck.com
Paladin Quote Check
16. 16
Accepting only
ECONOMIC BENEFITS
Outsourcing to your
LEGAL COUNSEL
Allowing your SUPPLIER
RELATIONSHIP MANAGER
to negotiate for you
Relinquish the POWER SEAT
COMMON NEGOTIATING MISTAKES
17. 17
Are YOU prepared to risk millions of
franchise value and make long-term
mistakes on a GUESS?
19. 19
IS MY BANK CONTRACT & PRICING VULNERABLE?
8 of 10 contracts
are 13.1% - 43.1%
above FMV
Average impact
is $ 1.38 Million per
institution or more
99% of contracts
have critical
business & legal
term defects
Vendors do not volunteer benefits (you must demand)
20. 20
COMPETITIVE TECHNOLOGY “CHASM” IS LARGE
Friendly FinTech is moving to fill the IT CHASM created by Legacy Core & IT
Loan
Origination
Systems
Robot
Process
Automation
Online
Banking
Artificial
Intelligence
Advanced
Payments
Mobile
Banking
Decision
Intelligence
Block
Chain
Voice
Banking
Chat
BOTs
Crypto-
Currencies
21. 21
CONTRACTS LIMIT FUTURE COMPETITIVENESS
RESULT:
SMALL INSTITUTIONS ARE UNABLE TO COMPETE
WITH LARGER COMPETITORS
Alternative Competitive Suppliers
Fintech Suppliers & Solutions
Incentives for Innovation (The IT GAP)
Fair Market Pricing
22. 22
BARRIERS TO FINTECH ACCESS
Contractual and Financial Penalties designed by Core IT Suppliers
Your Data
23. 23
Your Data
BARRIERS TO FINTECH ACCESS
Contractual and Financial Penalties designed by Core IT Suppliers
24. 24
Early bird Red zoneSweet Spot
36 30 24 18 12 0
Least
Good
Most
CostReductionOpportunity
THE QUICK AND THE DEAD
Begin research
24-30 months
Sign in the
“sweet spot”
Switching leverage
erodes quickly in RED
ZONE
Call to Action:
Yellow – Get started.
Blue – Get it done.
Red – Get moving!!
Months Remaining on Contract
Sweet Spot 18
months
24
months
25. 25
THE VENDOR SHELL GAME
Month 2 Month
2 Years
1 Year
4 Years
5 Years
3 Years
3 Years 6 Months
0 1 2 3 4 5 6 7
Managed Services
Network / WAN
ATM / EFT
Bill Payment
Internet Banking
Item Processing
Account Processing
26. 26
BAYCOAST BANK KEY LEARNINGS
Negotiating like a BOSS takes time and patience
• Attention to details buried deep in contracts. Hard to see if you don’t know what
you’re looking at.
• Net Savings from Core IT contracts = found $$.
• Repurpose savings toward fintech projects or
expansion.
• Play the long game, vendors do!
• Don’t underestimate the benefits of Blue Book data.
27. 27
UNLEASH YOUR
COMPETITIVE
ADVANTAGE
NEVER let your trust for
a vendor get in the way
of your critical thinking,
business sense and
fiduciary responsibility.
Your vendor will NEVER
volunteer something that
benefits you more than
them – you have to
know what to ask for.
NEVER go into a
multi-year, multi-million
dollar negotiation
without doing your
research and having
hard market intelligence
in your pocket before the
negotiation!
28. 28
$0 COST REDUCTION AND CONTRACT ASSESSMENT
EMAIL US
info@paladin-fs.com
Call Us: 877.746.4859
paladin-fs.com
3 Current Invoices
+ Contracts
Completely
Confidential
No Cost
No Obligation
