ABA survey: Fewer than half of banks satisfied with core provider

Fewer than half of banks said they were satisfied with their core provider, but fewer still said they were likely to switch providers when their contracts come up for renewal, according to a new survey of banks released yesterday during the American Bankers Association’s Conference for Community Bankers in Orlando. The survey found that just 47% of banks were extremely or very satisfied with their providers, down from 59% in 2020. Forty-two percent of banks were dissatisfied with their providers, with that percentage rising to 62% of banks using at least one of the three main providers.

Despite the dissatisfaction felt by many banks, only 21% said they were likely to switch providers. Those that have made the switch or are planning to do so cited the need to meet customer demands as a deciding factor. When asked the reasons for making a conversion, respondents said that outdated core technologies and a lack of support for integration were the most popular reasons, apart from cost.

As part of the survey, the ABA Core Platforms Committee defined the 17 most critical attributes for a bank’s successful relationship with its core provider. Banks and core platform providers both agreed on the importance of the 17 attributes driving bank success, but core providers overestimated their effectiveness in helping banks meet these goals. “The survey suggests core providers have an opportunity to bridge the gap between bank evaluations of their technology solutions and customer service and their own performance assessments,” said Kimberly Kirk, committee chair and EVP and COO of Queensborough National Bank & Trust in Louisville, Georgia. The survey also found wide support for the committee, with 75% of banks saying its work has encouraged core providers to address ongoing bank concerns.

Asked what they consider the most problematic terms in their core provider contracts, nearly half of banks cited service level agreements, with a close second being fees charged for implementation with a third-party provider. Banks also cited fees charged for upgrades and the ability to access data as other problems.

ABA releases major new report on middleware

In related news, ABA’s Office of Innovation unveiled a new report, “Exploring Banking Middleware Solutions,” during the confernce. The report provides a deep dive into middleware—a solution that can help banks bridge the gap between their legacy core system and new applications.

The report explores three strategic benefits of incorporating middleware into a bank’s technology schema. Among other things, middleware can help reduce reliance on a legacy core system and enable faster delivery of new products; build a single source of truth for customer data, leading to a better customer experience; and foster partnerships with fintech companies.

“Middleware provides a solution for banks to help them bridge their legacy technologies with new applications, without undergoing a complete core conversion,” ABA President and CEO Rob Nichols said yesterday during his opening remarks at CCB. “It’s a solution that empowers you to get new products to market and into consumers’ hands sooner. This comprehensive report from ABA will tell you how your bank can tap into the middleware sector and dramatically reduce your timeline for innovation, from inception down to implementation.”