This document discusses the disruption of legacy core banking systems by fintech solutions. It notes that smaller banks are under pressure from larger banks and fintechs. While legacy core vendors like Fiserv and FIS focus on modernization, their products and contracts create barriers that prevent banks from accessing competitive fintech solutions and adopting new technologies. The document argues that fintechs are filling an "innovation chasm" and that banks need to develop fintech adoption plans to cross this chasm, including restructuring legacy contracts, building API bridges to access data, and educating executives. However, it finds that no "fintech core messiah" currently exists in the market that can fully replace legacy systems.

1. FINTECH DISRUPTION
OF THE CORE IT
OBSTRUCTION
Navigating market, economic and contractual obstacles
to fintech adoption and digital transformation

2. $236 Million in Merger
Value Accretion
$386 Million in
Cost Reduction
276 Wins / 0 Losses
Paladin Blue Book
Launched June 2016
Group “Offensive”
Negotiations
200+ Institutions
Target $1B in Total Contract Revenue
$500 Billion + 30 years
IT Contract Negotiations
AARON SILVA
CEO of Paladin fs & The Golden Contract Coalition
Professional Negotiator & Industry Disrupter
2

3. The future of banking is here –
like it or not.
Why are legacy cores still
obstructing fintech adoption?
Which fintechs are leading the
market?
A CHANGING LANDSCAPE
3

4. DEFINE “FINTECH"
DISRUPTIVE
Competing with banks
COLLABORATIVE
”FRIENDLY”
Enhancing banks
LEGACY SUPPLIERS
Fiserv, FIS, Jack Henry, etc.
4

5. Large Banks Dominate FinTech Investment
SMALL TO MIDSIZE BANKS ARE UNDER SEVERE PRESSURE
Smaller banks are being squeezed by big banks, big tech and fintech
In a Year of Tremendous Growth
Community Banks have Underperformed
Relative to Midsize and Large Banks
8.74%
13.20%
15.75%
18.56%
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
Community S&P 500 Midsize Large
Banks Banks Banks
HOW CAN COMMUNITY BANKS COMPETE AGAINST SCALE, CUSTOMERS AND TECHNOLOGY?
5

6. 9.15% 8.77%
10.71%
3.30% 3.75%
15.08%
13.75%
16.76%
12.78%
18.67%
2018 2020 2022
Percent
Increase
2019
Total Non Interest Expense
2021
Data Processing Expense
TECHNOLOGY & RISING
Technology cost rising faster than other non-interest expenses
Source: Financial Information Systems
Core Legacy
Market
Competitiveness
6

7. 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
• Cloud 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
7

8. IT CHASM
LACK OF INNOVATION CREATES A “CHASM”
Friendly FinTech is filling the Innovation CHASM
Loan
Origination
Systems
Robot
Process
Automation
Online
Banking
Artificial
Intelligence
Advanced
Payments
Mobile
Banking
Decision
Intelligence
Block
Chain
Voice
Banking
Chat
BOTs
Crypto-
Currencies
8

9. LEGACY CORE TECHNOLOGY
WALLS OFF BANKS FROM COMPETITIVENESS
RESULT:
SMALL INSTITUTIONS ARE UNABLE TO COMPETE
WITH LARGER COMPETITORS
N
O
O
P
E
N
A
P
I
s
9

10. LEGACY CORE CONTRACTS
WALLS OFF BANKS FROM 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
10

11. Your Data
BARRIERS TO FINTECH ACCESS
Penalties designed by Legacy Suppliers to Prevent Crossing the Chasm
11

12. HOPE IS ON THE WAY!
Fintechs show the light

13. CORE
Lack of take-away capital
Risk of change
NO FINTECH CORE MESSIAH (YET)
1 Pent up demand
2
3
1313

14. In Market /
Unproven
Pre Market /
Unproven
In Market & Proven Pre Market / Proven*
NO FINTECH CORE MESSIAH (YET)
*Not proven in U.S. market or in smaller institutions.
Ineligible for rating:
14

15. In Market /
Unproven
Pre Market /
Unproven
In Market & Proven Pre Market / Proven*
ONLINE BANKING PLAYERS
Ineligible for rating:
*Abiliti
*DigitalOne
15

16. In Market /
Unproven
Pre Market /
Unproven
In Market & Proven Pre Market / Proven*
ONLINE ACCOUNT OPENING
16

17. Many other API fintech players not shown – call me for advice.
17
API Name Supplier True Open Pay 2 Play
Pay Per Sip
(Toll Fee)
Communicator Advantage / Open Fiserv No Yes Yes
Code Connect FIS No Yes Yes
J-Exchange / Connect Jack Henry Kinda Yes Kinda
PLAID Plaid Yes Yes No
MX MX Yes Yes No
NXTSoft NXTSoft Yes Yes No
CROSSING THE CHASM WITH API
Some vendors reward, some punish

18. Assess your technology stack.
Determine where fintech can help.
Develop a 3-5 year fintech innovation plan.
Repurpose cost savings toward Fintech
initiatives, purchase APIs.
Build / buy data warehouse to create a Toll-free
BRIDGE to YOUR DATA.
TWO PRONGED FINTECH ATTACK
PREPARE FOR FINTECH ADOPTION
Educate your executive team and board
of directors.
DE-HANDCUFF FROM LEGACY CORE
Restructure ALL Core & IT contracts and
pricing to lower or eliminate WALLS to
competitive Fintech suppliers.
18

19. FREE, NO STRINGS ATTACHED CONTRACT RISK & COST ASSESSMENT
EMAIL US
Call Us: 877.746.4859
info@paladin-fs.com
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20. paladin-fs.com goldencontract.com
THANK YOU
Aaron Silva
877-746-4859 x 704
asilva@paladin-fs.com
asilva@goldencontract.com