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Lies, Damn Lies, and Fintech Vendors’ Roadmaps

A Snarketing post by Ron Shevlin, Director of Research at Cornerstone Advisors

Guest Snarketing post by Scott Hodgins, Cornerstone Advisors

(Note from Ron Shevlin: A recent post on GonzoBanker.com, written by my colleague Scott Hodgins, discussed both vendor roadmaps and the recent acquisition of fintech vendor D+H. I felt that the roadmap discussion was important enough to highlight here on Snarketing. I’ve taken some liberties to make edits and additions, but the intellectual capital here is all Scott’s. He’s written a lot more great stuff on the GonzoBanker site — check it out)

The Fintech Vendor Roadmap Charade

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Vendors use product roadmaps and future enhancement lists to build a sense of optimism for bankers who are purchasing or renewing commitments to their solutions. It’s a delivery date promise meant to help bankers plan, but the fail rate on these promises is absurdly high.

Vendor product road maps have devolved so badly that even sales reps don’t really expect their clients to believe them, nudge-nudge/wink-winking the crowd when they begin the road map PowerPoint assault.

Walt Cox of Redwood Credit Union (and a former fintech vendor employee) posted on LinkedIn the following fictitious (at least I think it’s fictitious) conversation between a banker and a fintech vendor:

Banker: I want (fill in the blank).
Vendor: That’s on our roadmap (points to powerpoint slide).
Banker: When will it be live?
Vendor: Well, first step is finalizing the roadmap…
Banker: When will it be finalized?
Vendor: Sometime in the future, we have lots of clients to visit.
Banker: How much will it cost?
Vendor: Well, its on the roadmap, so I think we’ll have those details down the road.
Banker: Is there anything I can do to make sure it gets built this year?
Vendor: No. Good news is its on the roadmap!
Banker: So what’s the point of the roadmap?
Vendor: To pacify you during these conversations.

Everybody just laughs it off. The excuses for late or no product delivery roll off the vendors’ tongues like silk through a high-end loom:

  • “The development project expanded as we beta tested, so we’re pushing out the dates so we can make the product even better.”
  • “New regulations sidetracked us.”
  • “Offshore development challenges … yada yada yada.”

Banks accept this BS like it’s part of doing business.

Stop Giving Vendors a Pass

Banks and credit unions collect when a loan is delinquent. There’s a memo on the janitorial services CEO’s desk if the cleaning crew misses emptying a trash can the night before. And woe the career of the delivery dude who shows up 15 minutes late with the bagels for the loan committee meeting. But technology vendors, which cash the biggest individual checks banks write, pass Go and collect $200.

Banks must break this cycle of giving vendors a pass when it comes to development and enhancement promises. They’ve got to more formally track vendor development promises through a vendor performance management program and raise hell when promises aren’t met.

By strengthening the currency of commitments from vendors, an environment can be created where the players who focus on development, innovation and customer support will beat those that focus on slick sales and financial engineering with an exit strategy.

The banking industry’s technology future is increasingly dependent upon fewer and fewer vendors. Banks must hold the survivors accountable. That’s going to mean leaving them, even when it’s inconvenient to do so.

Vendor Performance Management in Reverse?

What’s puzzling, however, is that banks and credit unions appear to be moving in the opposite direction when it comes to vendor performance management — or at least, their vendor performance systems.

According to Cornerstone Advisors’ What’s Going On in Banking 2017 survey, fewer banks intend to improve the utilization of their vendor management apps in 2017 than did in 2016, and even in 2015.

Maybe banks’ vendor management systems are so good, few need to improve the utilization of those apps. I’m not putting my money on that reason.

Vendor management isn’t sexy. Bank and credit union directors struggle to stay awake during the interesting parts of board meetings (they even fall asleep during my presentations, believe it or not), so you can imagine what a discussion of vendor performance management will do to them.

But with increasing reliance on fintech vendors, banks and credit unions must come to the realization that vendor performance management will need to be a core competence — as important as asset/liability management and enterprise risk management — and may actually be a competitive differentiator in the future.

Just Thinking Out Loud….

They (the proverbial “they”) say that if you make a goal or promise public, you’re more likely to work towards that goal, or keep that promise.

Maybe that would help with fintech vendors’ roadmap promises.

Maybe what we (at Cornerstone) should do is keep a public record of vendors’ roadmap promises for everyone to see. Just thinking out loud…

Ron ShevlinRon Shevlin is Director of Research at Cornerstone Advisors. Get a copy of his best-selling book, Smarter Bank: Why Money Management is More Important Than Money Movement. And don't forget to follow him on Twitter at @rshevlin.

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Comments

  1. Having spent more than a decade working in sales and marketing at fintech vendors, I must respectfully disagree with the analogy between fintech roadmap on one side and delinquent loan, janitorial service and bagel vendor on the other. The latter have taken an order – maybe even payment – from the bank against a committed delivery date. It’s only fair that they’re raked over the coals if they fail to meet their delivery commitments. With roadmap, there’s no price, no order, so no broken commitment if the expected date of release of a feature / module is delayed – or even cancelled. From personal experience, I can guarantee that fintech vendors are badly penalized if they delay the delivery of piece of software which they’ve already contracted for. I agree with the rest of the post, especially the part about banks & CUs needing to establish vendor performance systems, but I can also confirm that all large banks I’ve dealt with – including in USA – do already have such systems. I recall a couple of them brandishing the vendor performance report of my company and competitors to extract some more discount during final contract negotiations.

  2. Katharaman — Fair points. With loans, janitorial service, even bagel delivery, there’s a contract for delivered service. But the roadmap isn’t free and clear, here. Banks are making critical business decisions based on vendors’ promises. And when the vendor doesn’t deliver, there’s no penalty except the threat of attrition — which, of course, is incredibly painful for the client.

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