10 critical issues and negotiating secrets that bankers should know before they sit down at the negotiating table. Silva will discuss his latest proprietary research findings that outline the problems, pitfalls and best practices in restructuring vendor contracts based on nationwide intelligence. Through real life examples of how banks often pay in excess of $1 million more than necessary over the life of their core services contracts, the audience will learn how to dramatically improve their core and IT spending efficiency and better protect their institutions from downstream risks hidden within their contracts.

1. SECRETS REVEALED
10 Insider Tips to a Great Core IT and Fintech Contract

2. 2
DEFINE: “CORE & IT”
Account & Data
Processing
Item Processing
ATM/EFT Services
Internet Banking
Bill Payment
Card Services
Network (WAN)
Monitoring
Server Management /
Protection

3. 3
LINDA STAHL
Business Development Executive
Paladin fs & The Golden Contract Coalition
$108 Million in Merger
Value Accretion
$346 Million in
Cost Reduction
138 Wins / 0 Losses
Paladin Blue Book
Launched June 2016
Group “Offensive”
Negotiations
100+ Institutions
$500 Billion + 30
years
IT Contract
Negotiations

4. 4
9.15% 8.77%
10.71%
0.30%
3.75%
15.08%
13.75%
19.76%
12.78%
8.67%
2014 2015 2016 2017 2018
PercentIncrease
Total Non Interest Expense Data Processing Expense
TECHNOLOGY & RISING
Technology cost rising faster than other non-interest expenses
Source: Financial Information Systems
Core IT
Solution Market
Competitiveness
Information redacted due to confidentiality limitations.
Please request full version by filling out the form or contact Paladin
@info@paladin-fs.com

5. 5
2019 FINANCIAL CANTOR FITZGERALD, EVERCORE AND
CITADEL RESEARCH
FIS Fiserv Jack Henry
Free Cash Flow $1.5 Billion (+$37M) $1.2 Billion (-$20M) $230 Million (-$25M)
Capital Expenditures 1% of revenue 6% of revenue 4% of revenue
Product Development 6% of revenue 3% of revenue 8% of revenue
Focus • Data center consolidation
• Loud strategy
• Modernization of
omnichannel and digital
banking solutions
• User experience updates
• Enhancements to platforms
• Payments integration
• Digital solutions
• Card Processing platform
migration
• Treasury management
• JHA Payments Hub
• Open banking strategy
Information redacted due to confidentiality limitations.
Please request full version by filling out the form or contact Paladin
@info@paladin-fs.com

6. 6
LEGACY CORE & IT SUPPLIERS POSE A CLEAR
AND PRESENT DANGER TO OUR INDUSTRY
Uncompetitive vintage services are
OVER-PRICED and void of any
market price efficiency.
Suppliers have NO INTEREST
in financially guaranteeing the
quality or performance of any
of their services or systems.
Core & IT suppliers DO NOT
INNOVATE and actively
manufacture barriers to outside
competitive fintech alternatives.
Contracts are ONE-SIDED,
outmoded, legally defective and
INTRODUCE SYSTEMIC RISK into
every banking franchise.
While the industry struggles
to survive through contraction,
suppliers thrive as SILENT
SHAREHOLDERS in every
M&A transaction.
Other than these facts…they’re
a great “PARTNER”!

7. 7
You have few market choices.

8. 8
WHY ARE CORE IT AGREEMENTS SO UNFAIR?
MARKET PENETRATION: OLIGOPOLY
93%
institutions ABOVE $1 billions assets
85%
institutions BELOW $1 billion assets
American Banker May 2018

9. 9
90%
2018
IT’S NICE TO BE THE OLIGOPOLY!
Market Performance, Penetration & Control
DOW, NASDQ, S&P
68%
2012
74%
2014
85%
2016
0%
50%
100
%
150
%
200
%
2015 2016 2017 2018 2019
204.38%
164.42%
114.07%
96.24%
62.33%
55.90%
Launched in 2016
FISV 123.29
FIS 92.68
JKYH
102.38
Information redacted due to confidentiality limitations.
Please request full version by filling out the form or contact Paladin
@info@paladin-fs.com

10. 10
Those are NOT Service Level Agreements.

11. 11
THE CORE IT OLIGOPOLY IS POWERFUL
20,000 statements accidentally sent to wrong bank customers
by an Item Processing supplier
The outcome
A major GLBA violation Hundred hours of customer
support to repair disaster
Incalculable
reputational damage
OLIGOPOLY OVER SERVICE LEVELS

12. 12
THE CORE IT OLIGOPOLY IS POWERFUL
20,000 statements accidentally sent to wrong bank customers
by an Item Processing supplier
The outcome
A major GLBA violation Hundred hours of customer
support to repair disaster
Incalculable
reputational damage
OLIGOPOLY OVER SERVICE LEVELS
RESULT: NO FINANCIAL PENALTY OUTLINED
IN SLA FOR GLBA VIOLATIONS
TOTAL PENALTY TO SUPPLIER = $0.19
Information redacted due to confidentiality limitations.
Please request full version by filling out the form or contact Paladin
@info@paladin-fs.com

13. 13
DO YOU KNOW THE DIFFERENCE?
SERVICE LEVEL OBJECTIVES
(what you ACTUALLY have)
SERVICE LEVEL AGREEMENTS
(what you think you have)
Commitment to perform (subjective).
Processes or functions that are not necessarily critical
nor can be measured easily by bank.
Not defined or described.
If a ‘miss’ continues – buyer can ‘redial’.
They fix the problem using ‘best effort’.
If buyer is harmed you must beg for compensation
or pay great penalties to leave the service or contract.
Guaranteed performance standard.
Tied to meaningful defined processes or functions.
If a ‘miss’ occurs – a credit is issued.
If a ‘miss’ continues – buyer gains certain rights.
If a ‘miss’ occurs too many times – buyer may leave
the service or contract with no penalties.

14. 14
You don’t know the game (as well as they do).

15. 15
THE CORE IT OLIGOPOLY IS POWERFUL
THE COMPROMISE:
bank extended their agreement
by 3 years. supplier reduced
setup fee by 50% ($50,000).
a supplier quoted $100,000
as setup fee for 3 new products.
the bank needed the products to
compete, even without the budget.
OLIGOPOLY OVER PRICING

16. 16
THE CORE IT OLIGOPOLY IS POWERFUL
THE COMPROMISE:
bank extended their agreement
by 3 years. supplier reduced
setup fee by 50% ($50,000).
a supplier quoted $100,000
as setup fee for 3 new products.
the bank needed the products to
compete, even without the budget.
OLIGOPOLY OVER PRICING
An extension cost of
$625,000
The same 3 products
were installed across the
country for a setup fee
< $10,000
Already overpaying
$17,000/month
(processing fee)
RESULT: BANK PAID 6X FAIR MARKET VALUE
Information redacted due to confidentiality limitations.
Please request full version by filling out the form or contact Paladin
@info@paladin-fs.com

17. 17
Clawbacks.

18. 18
RESULTING FROM A MERGER
A $700m bank planned to terminate their agreement
three months early
Why?
To allow conversion after 9 years
with FISERV
Estimated Termination Fee
$120,000 at 80% value X
remaining term
MERGER NIGHTMARES

19. 19
RESULTING FROM A MERGER
A $700m bank planned to terminate their agreement
three months early
Why?
To allow conversion after 9 years
with FISERV
Estimated Termination Fee
$120,000 at 80% value X
remaining term
$1.1 MILLION TERMINATION PENALTY
(+ conversion, de-conversion and integration fees)
RESULT:
Hidden “Golden Handcuff” Provision
MERGER NIGHTMARES
“CUFF ‘EM DAN-O”
Information redacted due to confidentiality limitations.
Please request full version by filling out the form or contact Paladin
@info@paladin-fs.com

20. 20
Punished for helping your supplier
GAIN or MAINTAIN market share.

21. 21
$460,000
PAID TO
(Conversion, programming
and interface fees)
THE CORE IT OLIGOPOLY IS POWERFUL
OLIGOPOLY OVER MERGERS
Bank Processed By Buys an Institution Processed By a Competitor
Bank 1 Bank 2
$860,000
PAID TO
(Termination, de-conversion
expense)

22. 22
$460,000
PAID TO
(Conversion, programming
and interface fees)
THE CORE IT OLIGOPOLY IS POWERFUL
OLIGOPOLY OVER MERGERS
Bank Processed By Buys an Institution Processed By a Competitor
Bank 1 Bank 2
$860,000
PAID TO
(Termination, de-conversion
expense)
SUPPLIER REVENUE
doubles as competitor
eliminated
$2x
NO CUSTOMER
acquisition cost
$0
SHAREHOLDERS PAY
a bonus for supplier
conversion effort
RESULT:
Unfairly Rewarded
Information redacted due to confidentiality limitations.
Please request full version by filling out the form or contact Paladin
@info@paladin-fs.com

23. 23
Bank 1
36 Months
Remaining on Contract
Bank 2
24 Months
Remaining on Contract
THE CORE IT OLIGOPOLY IS POWERFUL
OLIGOPOLY OVER MERGERS
Two Banks Merge Using SAME Processor
Bank 1 Bank 2

24. 24
Bank 1
36 Months
Remaining on Contract
Bank 2
24 Months
Remaining on Contract
THE CORE IT OLIGOPOLY IS POWERFUL
OLIGOPOLY OVER MERGERS
Two Banks Merge Using SAME Processor
Bank 1 Bank 2
RESULT:
Combined Entity Must Do Either of the Following
PAY 24 MONTH
TERMINATION EXPENSE
(even with same supplier!)
1 2
EXTEND AGREEMENT
by a term equal to
value of lost profit
3
PAY
for all “lost profit”
Information redacted due to confidentiality limitations.
Please request full version by filling out the form or contact Paladin
@info@paladin-fs.com

25. 25
IT’S REALLY NICE TO BE THEM!
Termination, Conversion and Integration Revenue
$223M
to
$261M
$281M
to
$320M
$360M
to
$410M+
Information redacted due to confidentiality limitations.
Please request full version by filling out the form or contact Paladin
@info@paladin-fs.com

26. 26
They bank on you making mistakes

27. 27
Accepting only
ECONOMIC BENEFITS
Outsourcing to your
LEGAL COUNSEL
Allowing your SUPPLIER
RELATIONSHIP MANAGER
to negotiate for you
Relinquish the POWER SEAT
COMMON NEGOTIATING MISTAKES

28. 28
Are YOU prepared to risk millions of
franchise value and make long-term
mistakes on a GUESS?

29. 29
“There is an 86.5% probability
of failure captain.”

30. 30
IS MY BANK CONTRACT & PRICING VULNERABLE?
8 of 10 contracts
are 13.1% - 43.1%
above FMV
Average impact
is $ 1.38 Million per
institution or more
99% of contracts
have critical
business & legal
term defects
Vendors do not volunteer benefits (you must demand)

31. 31
Suppliers Limit YOUR Access to
New FinTech Alternatives

32. 32
COMPETITIVE TECHNOLOGY “CHASM” IS LARGE
Friendly FinTech is moving to fill the IT CHASM created by Legacy Core & IT
Loan
Origination
Systems
Robot
Process
Automation
Online
Banking
Artificial
Intelligence
Advanced
Payments
Mobile
Banking
Decision
Intelligence
Block
Chain
Voice
Banking
Chat
BOTs
Crypto-
Currencies
IT CHASM

33. 33
CONTRACTS LIMIT FUTURE COMPETITIVENESS
RESULT:
SMALL INSTITUTIONS ARE UNABLE TO COMPETE
WITH LARGER COMPETITORS
Alternative Competitive Suppliers
Fintech Suppliers & Solutions
Incentives for Innovation (The IT GAP)
Fair Market Pricing

34. 34
Timing can mean
millions.

35. 35
Early bird Red zoneSweet Spot
36 30 24 18 12 0
Least
Good
Most
CostReductionOpportunity
THE QUICK AND THE DEAD
Begin research
24-30 months
Sign in the
“sweet spot”
Switching leverage
erodes quickly in RED
ZONE
Call to Action:
Yellow – Get started.
Blue – Get it done.
Red – Get moving!!
Months Remaining on Contract
Sweet Spot 18
months
24
months

36. 36
THE VENDOR SHELL GAME
Month 2 Month
2 Years
1 Year
4 Years
5 Years
3 Years
3 Years 6 Months
0 1 2 3 4 5 6 7
Managed Services
Network / WAN
ATM / EFT
Bill Payment
Internet Banking
Item Processing
Account Processing

37. 37
It’s Time to Change the Game.

38. 38
UNLEASH YOUR
COMPETITIVE
ADVANTAGE
NEVER let your trust for
a vendor get in the way
of your critical thinking,
business sense and
fiduciary responsibility.
Your vendor will NEVER
volunteer something that
benefits you more than
them – you have to
know what to ask for.
NEVER go into a
multi-year, multi-million
dollar negotiation
without doing your
research and having
hard market intelligence
in your pocket before the
negotiation!

39. 39
$0 COST REDUCTION AND CONTRACT ASSESSMENT
EMAIL US
info@paladin-fs.com
Call Us: 877.746.4859
3 Current Invoices
+ Contracts
Completely
Confidential
No Cost
No Obligation

40. 40
Join now
@ GoldenContract.com
Footer
The only national banking coalition fighting for Banks against
the Core IT oligopoly for a fair deal.

41. paladin-fs.com
THANK YOU
Linda Stahl
877-746-4859 x 723
lstahl@paladin-fs.com