by Rob Nichols
If you are like many of the hundreds of bankers I have talked to since joining ABA three years ago, odds are you have an issue with your core provider. Yes, these companies are critical partners, and they deliver many excellent services in a professional and dependable manner. But when it comes to offering you the agility you need to keep pace with technological innovations, they may leave you lacking.
That’s not to say that the industry’s primary core providers aren’t developing new products— but they do not always produce the ones you want to offer your customers or enable you to engage with those vendors that do.
None of this would pose an insurmountable obstacle it if weren’t for the fact that breaking up with a core is exceedingly difficult. The contracts are long, your provider options are limited, conversion is a bear and a single bank’s leverage is almost nonexistent.
So what can a bank do? Individually, options are limited, but collectively we can make a difference. That’s why I recently wrote to the leaders of the three major core providers on bankers’ behalf. The message, delivered respectfully: Empower community banks with the modern technology demanded by today’s competitive marketplace. That means either delivering technology solutions themselves or, if they cannot, allowing banks to engage with other vendors that can.
I invited each to engage with ABA and our new Core Platforms Committee, which is composed of community bankers charged with identifying concrete ways we can address these challenges. The need for action is urgent, and I’m confident our committee and the core providers will respond accordingly.
As we work to resolve this here-and-now issue, community bankers must also be focused on the future. Given the rapid and constant pace of innovation in the fintech space, it’s vital that banks as well as the associations that represent them are nimble and responsive to new opportunities.
With that in mind, ABA recently made an innovative, direct investment in Summit Technology Group, an emerging company that is helping banks and other businesses migrate to the cloud.
We view this action, which followed a thorough vetting process by our staff experts and board members, as an investment in the future. It offers not just an opportunity for a return on our investment, but also better positioning for our members.
We won’t stop there. ABA’s board has directed us to consider additional opportunities to invest in fintech companies that we expect to have an important impact on banking. We’ll specifically look for those that have a strong business model in a growth sector, that help banks in efficient and innovative ways and that benefit you.
We’re doing this for the same reason you are exploring new technologies to serve your customers. And because we know how hard it is to focus on the future when the present has challenges of its own.
Banks are used to technology transforming the way we do business—that’s not new. (After all, banks were fintech before fintech was cool.) It’s the pace of innovation that’s new—and it won’t stop.
As the head of Google’s R&D arm tells Tom Friedman in the book Thank You for Being Late, the days of static stability are over, and we must learn to live in a new state of “dynamic stability”—the kind of balance you get when riding a bike, not trying to stand still on one.
ABA and your state association are committed to helping you find and keep that balance, and to helping you keep pace with change, so that your banks can continue to grow and succeed.
Rob Nichols is president and CEO of the American Bankers Association. You may e-mail him at firstname.lastname@example.org.