Meeting in the Middle(ware)

by Rob Nichols, American Bankers Association

For community banks seeking to remain competitive in today’s crowded financial services marketplace, innovation is imperative. A relationship with a core provider can make or break an institution’s innovation goals, and for too many community banks, legacy core technologies are holding them back.

This is a critical challenge that ABA set out to solve through its Core Platforms Committee, which was founded in 2018 to engage the top players in core processing and help break down the barriers that impede banks’ ability to offer customers the products and services they want. Since the committee was founded, we have improved the lines of communication with the core providers, and we remain optimistic about the commitments we’ve received from many of these firms to improve in this area.

But for many banks, innovation remains a struggle. In fact, it’s estimated that more than two in five U.S. banks are still running core banking processes on legacy systems that were designed nearly four decades ago. In a recent ABA survey, 42% of bankers expressed dissatisfaction with the service they receive from their core provider, identifying several pain points including a limited ability to customize offerings and subpar integration capabilities with other technologies.

However, undergoing a complete core conversion is a massive undertaking that comes with significant costs, complexities and risks, and many banks are understandably hesitant to abandon their longtime core provider. So how can community banks bridge the gap?

One possible alternative to a “rip and replace” strategy is to employ the use of middleware—a solution that leaves existing core systems in place, while wrapping the core with a new layer of technology, typically an API architecture. This architecture enables banks to reduce reliance on their legacy core to deliver products faster; collect, maintain and use customer data more effectively; and foster partnerships with fintech companies. It’s a strategy that can considerably reduce the timeline for bringing new products and services to the market while reducing reliance on a legacy core system. ABA’s Office of Innovation highlights the case for middleware in a newly released whitepaper, “Exploring Banking Middleware Solutions.” The paper provides an in-depth look at how banks can benefit from incorporating a middleware layer into their core systems and gives a snapshot of the middleware vendor landscape in the U.S., as well as considerations banks should take into account when engaging with a middleware vendor. I urge you to read the white paper, which you can access at,  and check out the other resources the Core Platforms Committee has made available at

ABA is deeply committed to helping its member banks succeed—regardless of where they are in their innovation journey. Our Office of Innovation works exhaustively to stay on top of the latest trends, connect banks with strategic partners and pave the way for responsible innovation policy in Congress and at the regulatory agencies.

Successful innovation is key to the preservation of the broad and diverse community banking sector that makes our nation’s financial services industry the envy of the world.

Email Rob at