Win Win Win

Win Win Win
Walter Wriston, former Chairman and CEO of Citi once said, “Information about money has become almost as important as money itself.” Google gets it. Up to this point I have been skeptical of the NFC business case and have blogged about it. Thin Isis Making a Bad Business Case Worse: Durbin and Mobile NFC Google has the ability to make this happen. Why? Because they don’t care about the payment. They care about the information around the payment. Who am I? What am I searching for? What do I buy? They don’t need a piece of the payment pie, because they will get a piece of the advertising and promotion pie, which is what pays the rent at Google. Any new payment initiative needs to make three parties happy: the consumer, the bank (or credit card scheme), and the merchant. This works for all three. The bank will be able to drive more purchases through their system, without giving anything up. They can also provide, with permission, payment data. Retailers can focus their offers on the most interesting customers. Google is partnering with MasterCard, Citi, First Data, Sprint, and retailers such as American Eagle Outfitters Inc., Macy’s Inc. and Walgreens. American Eagle might want to target customers who spend more than $100 per month on clothes. They may want to target those who spend more than $200 a month on clothes and are less than a mile from one of their stores. They will pay to be able to focus their advertising dollars on such a consumer. The merchant is happy. The consumer loves the offer. More targeting means consumers can get better offers. It’s a win win win.

Citi’s core migration

Citi’s core migration
FIS announced that Citi is going to be conducting a core migration and didn’t provide many details. I filled in some of the gaps in an article in American Banker. For those of you who don’t subscribe to American Banker, This is a big deal with Citi moving their entire deposits from an internally developed legacy system to licensed software. Many of the people who developed this internal platform are no longer with Citi, so maintenance and changes are a challenge. I am consistently surprised that banks that conduct a massive core migration are continuing to move to batch systems rather than move to real time systems. Please see the Celent report, Overcoming the Fear Factor: Migrating Core Banking Systems Citi is moving to Systematics, the 30 plus year old mainframe, COBOL, CICS, batch system that runs at Bank of America, RBS Citizens, and lots of other large banks. If a bank is going to all the trouble of moving core systems, why not go all the way and move to real time, to say FIS Profile? To answer my not so rhetorical question, it will involve changes in item processing and increase risk, but there is certainly some reward to go with that. It’s much easier to have such an opinion when I’m not responsible for the conversion and change management. American banks are clearly concerned about adopting the change that a real time system brings. Union Bank (formerly Union Bank of California) is moving to Infosys Finacle, which is a real time system. I eagerly await the results of this migration. Will this start the long-awaited avalanche of core banking migrations? Not yet, but pressure is building. The Citi migration is not a game changer. The Union Bank migration may well be. The Canadians are quite active and there should be some announcements soon. I think that if Union Bank is able to out-innovate the competitors with their new real-time platform and reduce costs, the mass migration will start.