Sixty-eight percent of banks said they’ve been on their core processor for 10 years or more, and the longer banks operate on the same core, the less satisfied they are, according to a survey from the American Bankers Association. For instance, 71% of banks that have been on their core platform for less than two years say they’re satisfied with their core, compared to 49% that have been on their core for a decade or longer.
Banker Trey Maust heads the ABA’s Core Platforms Committee, and he joins the podcast Reinventing Banking to discuss what the ABA’s 2024 Core Platforms Survey says about the important and evolving relationship between cores and their customers, especially in the face of greater digitization trends. Maust is the executive chairman and cofounder of Lewis & Clark Bank, which has $342 million in assets and is based in Oregon City, Oregon. (Lewis & Clark announced its acquisition by Maps Credit Union on April 14; this episode was recorded before that announcement.)
Core technology is central to a bank’s responsibilities to keep accurate financial records for customers and has historically powered its ability to offer new products and services. But changing expectations, delivery channels and customer demographics have put pressure on the bank-core relationship, formalized by contracts that can span a decade or longer. In fact, ABA-member banks tell the trade group that their relationship with their core providers is “their primary non-policy concern,” according to the ABA Core Platforms Committee.
There’s reason to be concerned. Only 53% of banks responding to the survey said they were satisfied with their core platform provider — a figure that’s up from 47% two years ago.
The survey included 780 responses from 679 banks. They were asked both about the core platforms banks use and the companies behind them. One core — COCC — had 83% of customers extremely or somewhat satisfied, compared to only 27% of Fiserv DNA customers that used the same underlying technology. Maust says this variance may reflect the difference between the client bases — one has a large, broad base of dissatisfied customers and the other has a narrow group of happy customers whose needs may be strategically aligned with their core.
In a statement provided to FinXTech, Fiserv agreed that the survey demonstrated “that the DNA core platform resonates strongly with client needs.”
“Fiserv is listening, learning, and acting for our clients. Over the past year, we have made significant strides in enhancing service levels and continue to invest in initiatives that deliver on client expectations and enhance the client experience,” the company said.
Maust says this finding underlines the importance of alignment.
“I think the biggest takeaway … is not, ‘How do you manage your core and force them into a box?’” he says. “It is, ‘How do you figure out how to take the core that you have today and align it more with your business model? And if it doesn’t align, how do you … identify one that is very aligned with your business model and your business strategy?”
The survey collected data on more than 30 core platforms in the market, but the findings concentrated on platforms and companies that received 30 individual responses or more. Maust’s own Lewis & Clark Bank now uses a core solution from DCI, which he says didn’t receive enough responses to be included in the results. Gathering more data about the capabilities of smaller cores, as well as their user satisfaction, is an area of future focus for the survey.
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