American Banker ran an interview today with Bruce Lowthers, head of banking solutions at FIS, and asked some questions on what the core providers were doing to keep up with innovation:
Here are the Remedy Consulting takeaways from this article:
1. We always find it humorous how executives like Mr. Lowthers can use the perfect number of industry buzzwords intermixed with just the right amount of corporate doublespeak to reduce the number of details needed to make for a strong article. There must be a formula for buzzwords vs. doublespeak that an executive must use in order to land an executive role in the fintech industry.
2. Mr. Lowthers does make a good point on moving services to the “cloud”.
We often find the “cloud” term mis-used in the banking and fintech industries. The general assumption seems to be that all provider are hosting services with cloud providers like Amazon or Microsoft Azure. Mr. Lowthers does a good job of clarifying that the most secure cores (FIS, Fiserv, JHA) have their own hosted services. This makes them more secure than the Amazon/Citigroup breach that recently occurred. Since hackers have more reason (there are a more diverse group of companies hosted there) they take the opportunity to continue to try to hack those public cloud services.
The secure private clouds of the incumbent core providers is a significant advantage that they have over the newer open banking and core start-ups that have recently come on the market. Many of those new services will be hosted on the public cloud. The Big 3 put significant investment into maintaining their own secure data centers, and it remains one of the reasons why the banking and credit systems in our country remains as secure as possible.
3. We are always disappointed when an executive prioritizes security measures over innovation. Don’t get us wrong, security and the proper infrastructure is critical to getting the job done, but aren’t security and product development completely different areas of the FIS’s technology organization, requiring completely independent skill sets? Why can’t they do both at the same time?
4. Mr. Lowthers discusses that FIS has brought “over 50 products to market in the past 18 months”. Here is that corporate doublespeak we talked about earlier. I’ll bet that if we caught Mr. Lowthers or any one of his clients on the street this afternoon, neither could name even 20 of those 50 products.
It may come down to his definition of a “product”. If a widget within one of their existing products could be counted, as well as maintenance upgrades and regulatory improvements, FIS may be able to name 50 new “products” developed in the past 18 months. Outside of that, we’ll write this off to a fact that American Banker likely will not check. The American Banker reporter could simply have asked Mr. Lowthers for a list of those new products.
5. We at Remedy agree with Mr. Lowther’s opinion that data will be a word to watch in the near future. It would have been a stronger article if he would have provided some details on initiatives that FIS has in place in the areas of allowing their clients better opportunities to use their own data, any AI initiatives, etc..
6. There is an interesting shot that he takes at Fiserv in mid-article:
“large organizations are spending huge amounts of money transforming themselves. [The smaller banks] are a little bit handicapped in that they don’t have that same access to capital. They have companies like Fiserv and others to step forward and drive that.”
Our interpretation is that he seems to be saying that FIS only has large bank and credit union customers who have the money to innovate outside the technology that FIS provides- customization, product development, etc. All of the smaller banks and credit unions who do not have the resources to build their own custom solutions are Fiserv’s problem. We found this a bit of an odd comment.
In conclusion, it was nice to have a busy executive take the time to be interviewed, but the article covered very little detail on what innovative approaches FIS has recently taken to build more customer functionality into their product line.