Bank executives don’t exactly give their core providers a ringing endorsement in Bank Director’s Core Provider Ranking, conducted in September and October 2016, particularly when it comes to these companies’ willingness to integrate with third party applications and their ability to offer innovative solutions.
Eighty-six executives, including chief executive officers, chief information officers and chief technology officers, rated the overall performance of their bank’s current core provider, and within individual categories that explored aspects of the provider’s service to the client bank, on a scale of 1 to 10, with 10 indicating the highest level of satisfaction. An average score was then calculated based on the individual ratings. Participants were not asked to rate other core providers. The executives surveyed represent banks between $100 million and $20 billion in assets. Forty percent of respondents indicate that Fiserv is their bank’s core provider, while 26 percent use FIS and 19 percent Jack Henry. Sixteen percent indicate that they use another provider.
While respondents express some disappointment in what is likely their biggest vendor relationship, one core provider does come out on top.
Average overall score: 7.18
According to 67 percent of its customers, FIS, headquartered in Jacksonville, Florida, is the only core provider that keeps pace with innovations in the marketplace.
FIS has been the most active acquirer of the big three core providers. David Albertazzi, a senior analyst at Aite Group, says FIS has a great track record of acquiring and integrating innovative companies into the firm’s suite of products. Beginning in 2012, FIS has acquired six firms, according to crunchbase, a data firm that tracks the technology sector. These include two compliance solutions, a payments technology company and a mobile banking solution. Its most recent acquisition was the software firm SunGard, in 2015.
FIS features nine different core systems in the U.S. The company came out on top within all individual categories but one, rating highest for being a cost effective solution, communicating with clients about new products and updates, providing high quality support, offering innovative solutions and for the company’s willingness to integrate with third-party applications.
#2 Jack Henry & Associates
Average overall score: 6.63
Jack Henry, based in Monett, Missouri, came in just behind FIS in many of the individual categories, but rated highest of the three when it comes to being easy to contact and responsive when issues and problems arise. Albertazzi says customer service is a core tenet for the company, and Jack Henry regularly measures how well its IT and support staff are performing. Those efforts are clearly recognized in the industry.
Jack Henry offers a more streamlined product selection compared to FIS and Fiserv— according to Aite, just six core systems. Recent acquisitions include Banno, in 2014, a mobile account platform, and Bayside Business Solutions in 2015, which expanded the provider’s commercial lending suite.
Average overall score: 4.97
Brookfield, Wisconsin-based Fiserv features 18 core systems, according to Aite—the most of the three core providers. That variety, along with its ubiquity in the banking space—Fiserv serves one-third of all U.S. banks and credit unions—may account in part for its low rating.
Client perceptions of their core provider’s performance can be muddied by several factors, including the age of their core system, says Albertazzi. The client bank may be loath to take on a conversion, and instead remain on an old system that the provider is no longer fully supporting. Bank Director did not rank individual systems, but rather the companies’ performance overall. A client running an outdated, basic core would be more apt to criticize a vendor than one using a shiny new system tailored to integrate with the latest-and-greatest fintech solution on the market.
If acquisitions have the potential to jumpstart innovation for legacy core companies, Fiserv could see a boost soon. Fiserv has been a significantly less active acquirer in recent years, compared to Jack Henry and FIS, with just one acquisition in 2013. But Fiserv recently acquired Online Banking Solutions, an Atlanta, Georgia-based provider of business banking technology, which promises to deepen Fiserv’s relationships with commercial banks.
As a group, other providers averaged a score of 6.07, just above the overall average for all providers of 6.02. One-quarter of retail banks could end up opting for startup providers for their online and mobile banking solutions by 2019, predicts Stessa Cohen, research director at Gartner, a research and advisory firm. Currently, 96 percent of banks rely on their core provider for services outside of core banking, according to Bank Director’s 2016 Technology Survey. As banks open up to other technology vendors, it’s possible they’ll lessen their dependency on the legacy core providers, and even open up to newer core solutions.