Independent Banker - April 2024 - 21

" Changing cores is one of the
biggest decisions any financial
institution ever makes. The core
is the backbone of how your
system runs. Everything hooks up
to the core, and that's how your
customers see your process. "
-LANCE NOGGLE, ICBA
a " zombie core, " or a core that still
functions but is essentially dead, says
Smith. He explains that zombie cores
are no longer profitable and so receive
only the scantest of vendor support.
David Saylor, founder and
president of Genesys Technology
Group, which advises on core-vendor
selection, points out that community
banks often change cores when a
relationship between a provider and a
bank becomes toxic.
" If your biggest pain point is you're
a small fish in a big pond and you
don't feel like you're being heard,
you're being nickeled and dimed-in
that situation, we see banks moving, "
he says. " If the relationship is painful,
it makes it a much easier decision to
go out and find somebody to replace
your current core. "
QUICK STAT
2-3%
Estimated percentage of banks that
change their cores in a given year
Q: For better operations
today and in the future, what
core functionalities should a
community bank look for?
A: David Albertazzi, director, retail
banking and payments, for Datos
Insights, notes that banks undertaking
a core change are typically looking
for a smooth user experience and
ease of implementation. Popular
features include the ability to onboard
new customers and offer online
account-opening solutions.
He's also seeing an appetite
for a wider breadth of payment
capabilities, as well as more insights
into customers. Older systems, he
explains, were built around the
transaction, but today's bankers want
" a 360-degree view of the customer. "
Finally, he sees bankers who are
searching for a more open platform
that can integrate with third parties
and use APIs.
For smaller banks, Albertazzi is
seeing a preference for " low-code
to no-code solutions, " or products
configured to meet a bank's needs
with a minimum of custom coding.
Potts emphasizes that the latest
features may sound appealing, but
the decision to switch ought to be a
solidly strategic one.
" You better have the most strategic
objective in mind before you even
contemplate making a core change, "
says Potts. " This isn't like lining
up a new piece of word-processing
software. This is a potentially
life-altering move on the part of a
bank, especially a community bank. "
Genesys's Saylor agrees, noting that
a bank should carefully consider its
own strategy as well as the strategy of
core providers under consideration.
For many banks, a critical question is
how much a core provider is investing
in a cloud core, or in moving away
from legacy-based systems and
creating a solid roadmap for new
technologies once regulators give the
green light.
Q: How do you assess the
stability of core providers under
consideration?
A: Saylor estimates that most banks
use large, well-established companies.
But what about some of the next-gen
entrants to the space?
Before selecting a shiny new
vendor, a community bank should
take a long, hard look at the
business's stability. For brand new
vendors, Albertazzi recommends
researching the company's annual
revenues and determining whether
its balance sheet is healthy or
overburdened with debt. Other
considerations include the number of
employees and even office presence.
" No bank, " he says, " wants to
partner with a core vendor that's not
going to be around tomorrow. "
Q: What aspects of service should
you consider when choosing a new
core provider?
A: The best gauge of service is
almost always existing customers,
says Cornerstone's Smith, who urges
independentbanker.org // 21
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Independent Banker - April 2024

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