One vendor or best of breed?


Many banks turn to their core banking system suppliers to also support their channels. Nearly all US core system vendors can do so, having built or bought solutions. Nevertheless, these are of a mixed quality. Integration with the back office is often a benefit, so too the ability to source from one supplier, but some banks – and it looks like a growing number – have decided that they will look elsewhere. There are some ‘best of breed’ suppliers that have a greater focus on channel banking and offer more functionally rich and modern offerings than many of those from the core system suppliers. Among the banks to have looked for separate solutions is Boston- based Eastern Bank, which went in Q1 2014 with the e-banking component of Finacle from India-based Infosys. The bank’s existing online banking set-up was a mix of applications hosted by FIS. The bank was keen to move to an on-site approach for its digital channels software, as it felt this would bring improved control, would facilitate creating more personalised solutions and enhance user experience. Also in Boston, First Trade Union Bank, a community bank with $702 million in assets, looked nearer to home, becoming one of a number of US banks that have gone with the digital banking platform from Texas-based Q2 Holdings. At First Trade Bank, the Q2 platform replaced the online banking offering of the bank’s core banking system supplier which, as at Eastern Bank, was FIS. First Trade Union Bank is a long-standing user of FIS’s Miser system, but it decided to replace its channel front-end because it was looking for ‘a fully-featured mobile banking product that provides a consistent look and feel to the online experience’, said the bank’s executive vice-president and CIO, Robert Landstein. He added that at the time the decision was made, the FIS mobile banking product did not offer features such as external transfers to and from other bank accounts nor the ability to view check images. ‘Since online and mobile are now our preferred banking avenue for our clients, we wanted to enable them to do as much as possible with ease from these channels.’ Five vendors were evaluated by First Trade Union Bank: FIS, ACI Worldwide, Netherlands-based Backbase and local providers Access Softek and Malauzai Software. Among the desired features were internal and external transfers, bill pay, secure messaging, mobile deposit, ACH and wire approvals and access to third-party First Trade accounts such as credit cards and merchant services. Q2 Holdings was chosen as it met all of the bank’s requirements and the vendor ‘has a forward-thinking approach to its products that aligns well with First Trade’s strategic needs’, said Landstein. The implementation kicked off in late December 2013. The integration between the Q2 platform and Miser was ‘relatively easy’, said Landstein, because Q2 already had a Miser interface. ‘First Trade uses some features that other Q2 and Miser customers do not, so Q2 had to make updates to the Miser


interface, but the vendor was able to make these changes relatively quickly and it did not delay our implementation.’ The biggest challenges of the project, Landstein said, were around the beta testing and the resources required for this. However, he noted, ‘we believe we have helped Q2 make this product better with all the feedback we have provided’. He said the bank was now happy with the new system but would ‘continue to implement fixes and make further enhancements to improve the product and our clients’ experience’. Also going with Q2 has been Cincinnati, Ohio-based First Financial Bank. The bank is a sizeable regional, with 106 banking centers in Ohio, Indiana and Kentucky, and $2.5 billion in assets. It uses Jack Henry & Associates’ Silverlake core banking system and was using this supplier’s NetTeller e-banking front-end. There was no problem with NetTeller, said the bank’s first vice-president, digital banking and payments, Brian Higgins, but it was attracted by the proposition and culture of Q2 Holdings. In particular, ‘they were ahead of many, if not all, online banking suppliers in relation to mobile. I firmly believe that this is where digital banking is going.’ While the number of customers using online banking had stabilised, there was tremendous growth in the use of mobile devices, including tablets, he said. Staying with the same supplier for the channels as for the core banking system would have been easier, acknowledged Higgins, with less IT and the need for fewer resources. ‘Certainly, whenever you have multiple suppliers, integration becomes more challenging, and this was the case.’ However, ‘we do strive to take an outside-in view’. The bank felt that the Q2ebanking platform could support where customers were heading and was therefore worth the extra effort.


One benefit that First Financial Bank felt it had gained by going with a specialist supplier was future-proofing. ‘I don’t think anyone can sit here today and tell you how mobile will evolve in the next five years, especially for payments,’ said Higgins. The bank also gained the focused knowledge of the supplier. ‘They are pretty innovative and progressive, and we’re learning a lot from them.’ Having implemented the Q2 platform and added a ‘great mobile experience’, First Financial Bank and Q2 started to explore where there could be additional value, which led to an idea to link business and retail bank customers. ‘It is extending the concept of relevancy,’ said Higgins. Essentially, small merchants in the communities served by First Financial can offer services to the bank’s retail customers via its consumer online banking. This can be used to drive traffic to the merchants’ websites or stores, with the rate of click-throughs proving far higher than for other forms of advertising because it is so relevant to the audience. One bank that looked as though it was also heading for a best of breed channel solution was Greenville, SC-based CertusBank. It became a notable US taker of the channel


US Financial Services Technology Market Report | www.ibsintelligence.com 21


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