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Lunch With Lions - ABA July 2020
1. WANT TO BE THE LUNCH
OR THE LION?
Hunting for Better Core, IT and FinTech Deals
2. 2
AARON SILVA
CEO of Paladin fs & The Golden Contract Coalition
Professional Negotiator & Industry Disrupter
$108 Million in Merger
Value Accretion
$346 Million in
Cost Reduction
138 Wins / 0 Losses
Paladin Blue Book
Launched June 2016
Group “Offensive”
Negotiations
100+ Institutions
$500 Billion + 30 years
IT Contract Negotiations
Aaron Silva
877-746-4859 x 704
asilva@paladin-fs.com
asilva@goldencontract.com
3. 3
The future of banking is here –
like it or not.
Why are we still dealing with
legacy cores and their one-sided
deals?
How can we prepare my bank for
fintech?
A CHANGING LANDSCAPE
Aaron Silva
877-746-4859 x 704
asilva@paladin-fs.com
asilva@goldencontract.com
4. 4
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
Large Banks Dominate FinTech Investment
8.74%
13.20%
15.75%
18.56%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Community Banks S&P 500 Midsize Banks Large Banks
HOW CAN COMMUNITY BANKS COMPETE AGAINST SCALE, CUSTOMERS AND TECHNOLOGY?
5. 5
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
6. 6
ANTIQUE SOFTWARE AND INFRASTRUCTURE
5 Core IT suppliers own the banking technology industry.
Lack of innovation combined with
…are crippling smaller financial institutions.
Long implementation processes Ridiculously high fees Long term, one-sided contracts
Fintech companies have difficulties to integrate to the legacy stack This can be addressed without converting to a new core
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
• 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
Information redacted for confidentiality purposes.
Please contact info@paladin-fs.com for full version.
8. 8
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
IT CHASM
9. 9
LEGACY CORE IT TECHNOLOGY
INTENTIONALLY LIMIT FUTURE COMPETITIVENESS
RESULT:
SMALL INSTITUTIONS ARE UNABLE TO COMPETE
WITH LARGER COMPETITORS
N
O
O
PEN
APIs
Information redacted for confidentiality purposes.
Please contact info@paladin-fs.com for full version.
10. 10
LEGACY CORE IT CONTRACTS
INTENTIONALLY 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
Information redacted for confidentiality purposes.
Please contact info@paladin-fs.com for full version.
11. 11
BARRIERS TO FINTECH ACCESS
Contractual and Financial Penalties designed by Legacy Core IT Suppliers
Your Data
13. 13
In Market / Proven
In Market / Unproven Pre Market / Unproven
Pre Market / Proven*
NO MESSIAH (YET)
Cores
*Not proven in U.S. market.
Information redacted for confidentiality purposes.
Please contact info@paladin-fs.com for full version.
14. 14
PREPARE FOR FINTECH ADOPTION
Educate your executive team and board of
directors.
Assess your technology stack.
Determine where fintech can help.
Develop a 3-5 year fintech innovation plan.
DE-HANDCUFF FROM LEGACY CORE
Restructure Core & IT contracts to lower barriers
to access of competitive Fintech suppliers.
Repurpose cost savings toward Fintech initiatives.
Build / buy data warehouse to create abstraction layer.
Develop 3-year roadmap to migrate 80% of
customers to online and mobile.
TWO PRONGED FINTECH ATTACK
Information redacted for confidentiality purposes.
Please contact info@paladin-fs.com for full version.
15. 15
WHERE CAN A BANK START THEIR FINTECH PLANNING?
Omnichannel Mobile-first Specialty / Niche Failure
16. 16
THE OMNICHANNEL VIEW
IoT Devices
Voice-Enabled (Alexa, Google, Siri, etc.)
Wearables
Mobile/Tablet
Desktop/Online
Social Media
ATM/ITMCall Center
Messaging/Chat
Text/Chatbot
Relationship Manager
Branch Teller
Third-Party Partnerships
Aaron Silva
877-746-4859 x 704
asilva@paladin-fs.com
asilva@goldencontract.com
17. 17
THE MOBILE-FIRST VIEW
IoT Devices
Voice-Enabled
(Alexa, Google, Siri, etc.)
Wearables
Mobile/Tablet
Social Media
Desktop/Online
ATM/ITM
Call Center
Messaging/Chat
Text/Chatbot
Relationship Manager
Branch Teller
Third-Party Partnerships
Aaron Silva
877-746-4859 x 704
asilva@paladin-fs.com
asilva@goldencontract.com
20. 20
BE THE LION
NOT THE LUNCH
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!
Aaron Silva
877-746-4859 x 704
asilva@paladin-fs.com
asilva@goldencontract.com
21. 21
FREE, NO STRINGS ATTACHED CONTRACT RISK & COST ASSESSMENT
EMAIL US
Call Us: 877.746.4859
info@paladin-fs.com
3 Current Invoices
+ Contracts
Completely
Confidential
No Cost
No Obligation