Core Solutions with Brad Smith // Cornerstone Hot Takes

After a long time of waiting for the international vendors to sort of mature, we actually now have two new classes of core solutions.

One is what we would call the next-generation cores, Finxact, Thought Machine, the FIS Modern Banking Platform, and then also the fintech-light, kind of banking-as-a-service cores like Synctera and Treasury Prime.

So we’ve got several new options that create a new opportunity and also some challenges.

What it’s done, the net effect, is it’s introduced this idea of having sidecar cores, which is essentially a second core for standing up a digital bank or other very targeted use cases.

But also, we see it accelerating the regional bank CIO strategy of de-risking their core, meaning reducing their dependence on their legacy core vendor, trying to become more nimble.

Yes, exactly.

And be able to have a little more leverage over their vendors, also be nimble to speed up fintech partnerships and other kinds of quicker development. So it’s really accelerated that process.

The net effect is, in the regional bank space, the monolithic best-of-suite core model that’s dominated for a couple of decades is dying a pretty quick death.

It doesn’t mean that legacy vendors are going away. It just means we’re becoming less dependent on them.

Best of breed, even componentized core, even taking it further down, is a strategy that works both for reducing risk but also for preparing for the potential replacement or migration to one of these next-gen cores as well, because they’re very componentized, modularized.

So it’s really changing the market, even for those that aren’t making a change to a next-gen core right now.