Vendor Consolidation: In theory and in practice
Vendor Consolidation: In theory and in practice
Following the news last week of activities in the fintech vendor triangle (ACI, S1 and Fundtech), there suddenly appeared a flurry of articles about the wonderful benefits of vendor consolidation for financial institutions (FI’s). While we all know, this is the PR engine spinning in advance of these deals, it is probably worthwhile to explore this subject in a bit more detail.
In theory, the benefits of vendor consolidation are considered to be:
- One-stop shopping
- Multi-product discounts
- Integrated products
- Innovation
In reality, these “benefits” typically translate to:
- Less competition and higher prices
- Bundled pricing with a complex cost structure
- Product integrated “in name only” – but you can probably sign a single contract
- Less innovation, longer time-to-market, less willingness of the combined vendor in new product development
- The vendor decides what platform is best for you and when it will be updated
The consolidated vendor experience will be similar to traveling on a very large cruise ship. You aren’t going to move very fast or get anywhere quickly, but the food and entertainment will be wonderful and you will make lots of new friends while watching product and customer opportunities go by like so many smaller, faster boats.
Enjoy those user conferences!
