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The Bottom Line

While community bankers were already weighing options on core processing and digital solution strategies before the pandemic, these decisions weigh heavily enough now to quickly tip the scales of survival. We’ve already shared our thoughts on how the “shelter in place” environment and its aftermath gave a serious jolt to any bank or credit union leader still on the fence about the importance of a robust digital backbone. 

In years past, soliciting digital proposals was a fairly straightforward exercise of reaching out to digital banking vendors and bill payment solution providers. However, things have gotten significantly more complex for financial institutions as touchpoints like mobile must be considered, not to mention P2P, self-service card controls, and advanced cash management options for business customers. Expectations for seamless omnichannel capabilities have increased as well.

Replacing a bank or credit union’s core system is not a decision to be taken lightly. A conversion to a new software provider can easily take more than a year in a best case.  These projects have often been compared to a heart transplant – very expensive, high risk and resource intensive. They also usually consume IT bandwidth that is needed to respond to a litany of business priorities such as the front office channels, products and services consumers depend on daily.

Much has been written about the “stickiness” of consumer payment apps and their value in cementing bank and credit union relationships with customers and members, but behind the scenes at most financial institutions (FIs) there is a far stickier relationship.  In this relationship, the bank or credit union is the customer and the cement composed of those mission critical services provided by their core processing vendor.