Progress in Partnership on Core Providers

By Jim Edwards
ABA Viewpoint

Reflecting on the history of my bank’s relationship with its core provider, you might think it’s the technology that has made us so loyal. That’s certainly been important, but the way our senior leaders describe it, it’s not the technology that matters most. It was the effective relationships between us and core providers’ employees that really stood out. We have been a customer of the same core provider for more than three decades. There is no way that happens without effective relationships.

ABA formed a banker-led Core Platforms Committee in 2018 to identify actions that can strengthen the relationship between banks and their core providers so banks can deliver the innovative products and services customers want and need. The committee established four principles that are the foundation for a strong bank-core relationship:

  • Quality service. This includes the right to on-time, exceptional customer service from core providers, and the right to service level agreements that are meaningful and relevant for the industry and easily determined and calculable.
  • Responsive and open communication. This means open and transparent communications with core providers including interacting with accountable and empowered individuals, as well as the right to one subject-matter-expert point of contact for each service line within a core provider who will manage all our technical issues and concerns.
  • Access to bank data. This is the capacity to easily access and manage all our data held by a core provider and any third-party technology provider delivered by the core, as well as assured access all our data from our core providers through APIs. Banks are entitled to access their data—both primary and derivative.
  • Fair contracts. Among other things, this means: the right to fair and equitable deconversion fees, based on the time, material and actual effort expended; the right to contract terms that support the bank’s business strategy and goals; and the right to exit a contract without penalty if the core provider is unable to deliver the contracted solutions.

You’ve read in ABA Daily Newsbytes and heard at ABA events about the results the Core Platforms Committee has achieved for the industry, including a wide array on information and fact sheets on more than two dozen core providers currently or soon to be in the marketplace. The committee also provided RFP/RFI templates, webinars, articles and other resources to help bankers understand the core sector. But we hoped for the committee to drive not just awareness but an improved relationship.

Late last year, we surveyed banks on their core provider relationships. Banks gave their cores an average satisfaction rating of 3.38 out of 5—not bad, but there’s room for improvement. Banks saw their biggest challenges in their ability to customize and to integrate with other tech providers via APIs.

We were pleased to find, however, that more than two-thirds of banks responding said that ABA’s work helped convince cores to address banker concerns and left banks better-equipped to manage their core relationship going forward. And more than one-third of banks said their cores have been more responsive and willing to address outstanding issues since 2018.

Core processors and banks are inextricably tied together. We need core processors now other more than ever—not just as software vendors, but as true business partners. We want core providers to do a better job of selling the cost/benefit. And bankers need core providers to provide better access to their data without extensive costs and barriers.

We believe continued discussion of these key challenges and ongoing policymaker engagement will drive better outcomes for banks and the communities they serve.

And ABA is continually seeking out new opportunities to connect bankers and core providers in ways that build trust and deal with issues and questions that matter most, for both groups. At ABA’s Conference for Community Bankers earlier this year, we introduced CoreConnection, a marketplace for community bankers to gain insights into multiple core providers.

It’s all part of our long-term work to help banks and cores build success—together.

ABA Chair Jim Edwards is CEO of United Bank, Griffin, Georgia.

ABA Viewpoint is the source for analysis, commentary and perspective from the American Bankers Association on the policy issues shaping banking today and into the future. Click here to view all posts in this series.