Chopra: CFPB to query core providers over costs, contracts, service

The CFPB is examining the effects of a concentrated core platform marketplace on consumers and banks, CFPB Director Rohit Chopra said today. Speaking to the bureau’s community bank and credit union advisory councils, Chopra said he is “concerned that the core services providers that small players rely on have too much power in the system.”

“The contracts written by the major core services providers are making it harder for local financial institutions to switch providers or use add-ons from outside technology providers, which allow the major incumbents to charge exorbitant amounts of money for their services, while discouraging them from quickly adapting their own products and services to fit with an ever-evolving banking tech landscape,” Chopra said. “The high costs, unescapable contracts, consolidation and slow reaction times are harming local financial institutions’ abilities to keep up with their bigger competitors.”

Formed in 2018, ABA’s Core Platforms Committee has developed principles for strong bank-core provider relationships that emphasize some of the concerns Chopra expressed: fair and transparent contracts, API access and access to core-controlled bank data. The committee has also released fact sheets on core providers that have met with the committee, developed sample RFP templates, and offered free webinars and articles. Most recently, ABA hosted CoreConnection, a first-ever event that brought together top core executives—including the CEOs of Fiserv, FIS and Jack Henry—to answer questions before a community banking audience. View ABA resources on core providers.