Building Roadmaps with Ryan Rackley // Cornerstone Hot Takes

Yeah, so I suggest you start simple. Start with a contract roadmap.

Okay.

That’s tangible. It can be done via research.

Okay.

Pulling together your major technology contracts with the contract term expiry date.

Okay.

That is the financially opportune outcome. That’s the date where you can make a difference if you need to.

Okay.

Either renew, replace, you know, back into it. Take a proactive position into that date.

But really, if you’re looking at a transformational effort and you’ve got four years left on that major technology contract, you’re stuck. Your termination penalties will preclude you from taking action.

Zero flexibility.

Well, yeah. Unfortunately, that’s true.

Yeah, and I think so many of us think of the contract piece of the business as an ancillary sort of annoyance to us running the business. But I think the reality is, I just got back from a conference myself, and the conversations about people who have auto-renewed their contracts for the last 10 years, I mean, how much money are they leaving on the table in that scenario?

Buckets. Buckets.

Well, and if you know when that date is and you bring that into the ELT discussions, it paints a clearer picture. Even if you do have the four years left, okay, great, you still are going to solve your problems, but you’re not going to do it with a conversion.

Right.

You have to optimize, use what you have more effectively, bolt on new solutions or integrate into a better tomorrow. That does not mean you stand still, because that’s the problem, right?

Nobody’s got more money to spend, so you’ve got to find a place to get those funds. Those contracts are generally the biggest opportunity to find the money to make sure that strategic plan becomes a tactical operating roadmap that you can deliver on for your institution.

Right.

Absolutely. On average, an FI is going to have 200 contracts in their technology portfolio under active management.

Okay.

And on any given year, you can’t convert 200 times. I mean, that’s just silliness, right?

Right.

On average, a bank or credit union is going to convert core once every 27 years.

Okay.

So in that timeline, you’ve got many different turns to reduce, to redirect.

Right.

So what happens in the United States, at least, and this goes across all industries, is as services, products and capabilities mature, they commoditize. What was optional yesterday at a premium price becomes standard.

A good example of this is seat belts in cars. In 1950, right? Option, paid for.

Right.

To anti-lock brakes. Remember that?

There you go.

Can you imagine buying a car today without anti-lock brakes? It’s in the base, right? And it’s become cheaper over time because people, process and tech, the building of that makes it cheaper.

Same thing applies with bank technology. Process, tech, the hardware, the software, everything gets more efficient.

Right.

You have to negotiate that back out, though.

That’s right. You can’t just let the contract roll and assume that all those efficiencies and opportunities are going to be passed back to you from a publicly traded company that has stockholders to respond to.

You need to aggressively manage that yourself or bring somebody in to help you aggressively manage that, to make sure that you can optimize it, because expenses are not going to go down unless you force the issue.

Indeed.

Yeah. I mean, if you go on autopilot, somebody will win, but it ain’t going to be you.

That’s right. That’s right.

So that’s true. And then, you know, if you look at negotiating, you get what you negotiate.

Yeah.

And there are a lot of bankers out there that try and do it on their own, but unfortunately, they’re flying blind. They don’t know what the scoreboard looks like.

Sure.

So they have to go forward guessing.

Right.

And that’s where we come in. We just break through that wall of opacity.