The simmering of banker's discontent for the solutions and partnerships offered by the Big Three Oligopoly ("the BTO") of FIS, Fiserv and Jack Henry is now hitting a boiling point. The Wall Street Journal on Friday printed an article titled: Frustrated by the Tech Industry, Small Banks Start to Rebel. The Golden Contract Coalition and several of our member bank senior executives were consulted heavily on the research for this article. Considering that most WSJ readers would have no idea what a "core IT" suppliers is - let alone their relationship with their community banks - writers were eager to report the injustice happening on our little industry island. How could the free market and our government allow an entire industry to survive under the thumb of just thee powerful entities?...was fascinating to the WSJ and clearly warranted a front page, top-of-fold position.
The international recognition of the problems faced by the community banking and credit union industry at the hands of these companies is warranted and a long time coming. I would like to believe the public shaming of their business tactics and one-sided contracts started with the launch of the Golden Contract Coalition in 2016. Validated by scores of banks joining the GCC (average assets of $1.7B each) it is obvious now to the BTO that banks are tired of long, exhausting negotiations against their "partners" and are now increasingly frustrated to learn that while the BTO revenues, profits and shareholder dividends continue to soar, the digital solutions they offer remain uncompetitive and mediocre at best. Chase, JP Morgan, BofA, Ally, CapitalOne and Wells Fargo and every shadow bank are digitally flogging the legacy fintech solutions provided by FIS, Fiserv and Jack Henry to our wanting market.
A flurry of moves by market entities have followed the Golden Contract Coalition lead and are upping the pressure on legacy service providers to do better. In late 2018, American Bankers Association severed all formal endorsement ties to the Big Three Oligopoly witnessed by quietly ending their only remaining legacy core IT relationship with Fiserv. Almost immediately thereafter, ABA launched their Core Platform Committee and CEO Rob Nichols fired off letters to the BTO leaders Yabuki, Norcross and Foss inviting them to join 21 other banks in a conversation about community bank demands on innovation. All three CEOs responded in the affirmative (of course) and are, "eager to join" any conversation [that won't affect their market dominance]. ABA followed these moves with a very public announcement of a strategic investment in FinXact a cloud-based core solution that will join competitors Nymbus, Mbanq and others vying for an opportunity to peel of any portion of the 90%+ pie held by the BTO.
It's All Good
All of this public attention is good for our collective cause of ending one-sided, onerous, unfair and over-priced deals. We take pride in knowing that GCC kicked the ball off the top of the mountain. There is power in numbers and the fact that main street media like Forbes [Banks Take on Core Tech Providers with Coalition] and Wall Street Journal are upping the pressure and hopefully forcing the BTO to up their game is a good thing.