Core Banking Solutions: Bundle or Unbundle?

Banking industry technology encompasses a wide range of vendors and services in a field that’s constantly evolving. Digital banking, cybersecurity, and automated processes are just a few examples of solutions offered by bank technology vendors these days.

Keeping up with changes in any one of these fields can be a challenge for any financial institution, including banks and credit unions. That’s why many financial institutions rely on outsourcing for the products, services, and expertise they need to remain safe, competitive, and compliant with industry norms and regulatory requirements. Of course, all of these needs are essential to providing the best customer experience.

Financial institutions have traditionally bundled various solutions with their core provider. Bundling with your core might result in a pricing discount, and you’ll also have fewer vendors to manage which is often a perceived benefit.

Common core banking bundles and add-ons can include digital account opening, online banking, ATM management, CRM software, website CMS, marketing services, statement printing and mailing, and the formatting, notification, and hosting of electronic statements. As core providers continue to widen the breadth of their solutions, offering such a wide array of services can significantly undermine the depth of expertise in any specific business line.

A report by the Federal Reserve Bank of Kansas City last year indicated that most depository institutions need to modernize their core systems and banking services, yet most of them “rely on core banking services providers for their core systems and ancillary services, so modernizing the systems requires close cooperation and coordination with these providers. In addition, ancillary financial services such as payments processing are often integrated with the legacy core systems, making the system architecture complex and difficult to change.”

The American Bankers Association recently published their “Core Platforms Survey” which found “overall satisfaction declines the longer a bank operates on their current core platform and declines steadily throughout the contract term, dropping to the lowest level as the bank approaches contract renewal.” The survey cited “customer service” as the top reason for considering a core conversion, with Fiserv and FIS receiving the lowest satisfaction scores.

In contrast, a company that specializes in a single business solution can provide flexibility, customization, and responsive support. While your core provider may not offer modern customer statement designs or may limit what types of documents you can delivery electronically, PrintMail specializes in financial document management. We’re not limited to redesigning DDA and savings account statements, and our eStatement platform can deliver any type of customer document, including statements, notices, compliance communications, and tax forms.

Think of your largest customer and all the accounts they have with your bank. They would naturally want the same kind of access and downloadability for each of its account statements. While core providers typically won’t provide document composition or eStatement delivery for loans and notices, we can make this happen and help you create a seamless user experience with single sign-on (SSO) or application programming interface (API).

Banking technology solutions aren’t a “one-size-fits-all” product or service, just as every bank or credit union has its own unique needs and expertise that its internal teams bring to the table. Every business in the FinTech space may specialize in one area or another, though it’s unlikely that any of them could realistically claim to provide everything a financial institution needs. FIS recently mentioned on their Fintech Insights blog that some estimates suggest the average number of fintech partnerships for banks in the U.S. is as high as 10 on average.

It may be tempting for a financial institution to receive multiple services from the same vendor, which may be offered as a way to save money. While this might make sense when looking at your bottom-line expenses, a deeper look at the practice reveals that bundling too many services together can result in substandard performance, unresponsive support, less innovation, limited flexibility, and a negative impact on customer experience.

Core Bundling – Pros & Cons

Bundled Core Services Often Deliver Mediocrity, Not Mastery

Core providers offer services that can be broken down into primary and ancillary. Primary services include account management, customer management, processing, and accounting. A core provider might also offer ancillary services such as bank product interfaces and customer support. Financial institutions have a choice of whether to outsource all ancillary services with a core provider, split them among multiple providers, or perform some of these tasks in-house.

A core provider might offer bundled add-ons that combine customer relationship management (CRM) with statement services and website management. While larger financial institutions may have the resources and staff to provide these services, smaller and midsize banks may be tempted to procure them from one or more key partners.

At first glance, this may seem like an efficient way of serving multiple needs through one vendor, though even if add-ons are offered as a discount they might not be worth the expense if they fail to adequately serve your customers. Additional tools are often basic and not built for performance, so a bank can be left with mediocre products across the board.

Any business assigns tasks and hires staff based on the particular skills of each person. You probably wouldn’t expect your accounting team to manage your website and write promotional emails. You wouldn’t ask your IT staff to handle your digital marketing or customer communications.

It’s the same with individuals as it is with companies. A business that seeks to do everything can become a master of none. Even its core competencies can suffer and reduce its ability to innovate, because it struggles to maintain various ancillary services and spreads its resources too thin. You might also wind up paying for services you don’t need, simply because they’re bundled together as part of a package.

We believe that by concentrating its efforts on whichever services it does best, a banking service provider can remain ahead of its competitors. This kind of expertise can also benefit its customers as it enables them to maintain the quality of service that their account holders expect.

Limited Flexibility Can Hurt Customer Experience (CX)

When you acquire services as a bundle, they tend to be offered as a package and can be hard to customize. This limits how well banks can serve their customers, especially in this modern era of digital communications and online banking.

Whether it’s offering a new service or protecting your systems and customer data, a provider that specializes in those areas would be far nimbler and more focused than a vendor that only offers a particular service as an extra that is really outside their area of expertise. Unbundling allows you to be selective and to choose among the best-in-class tools and providers that can better serve your needs.

As the digital banking landscape continues to change, banks and their service providers need to adapt in offering the products and security that banking customers expect and that they might pursue elsewhere if their needs aren’t met. As the saying goes, you’ll never get a second chance to make a first impression. You’re also unlikely to turn a customer’s negative experience into a positive one, or to stop them from complaining about it online.

Core providers treat document design as an afterthought. It’s just not their priority. Our team can help you create modern and mobile-friendly document designs that are user-friendly and include relevant marketing promotions. PrintMail has deep expertise working with data from most every core platform on the market, including Jack Henry, Fiserv, FIS, Modern Banking Systems, Harland, Finastra, Automated Systems Inc., Corelation, DCI, and more.

We’ve built many features into our eStatement platform for large commercial bank customers who need access to large numbers of accounts and documents. Whether they need selective access, sorting, filtering, calendar views, or bulk and scheduled downloads, we can make it happen for any document type, including those from third-party systems such as tax and wealth management.

Even if core providers try to emulate these features, it’s not something they’re heavily invested in. Any effort they make towards offering these services can create operational headaches for your team and security risks for your customers.

Support Is Slower and Less Specialized

Just as a provider of everything may become a master of none, large core providers can have overstretched support teams. This can result in long wait times, generic responses, and insufficient hands-on help when you need it.

When you interact with a bundled service provider, their team members may have more generic experience across a wide range of services. It might be difficult for you to find the right person or team within a vendor’s operations that can address a particular issue. This can make it difficult for them to respond to a problem in a timely and sufficient manner.

A specialized vendor is more likely to have support teams that are fully versed in the services they provide, allowing for a faster and more effective response. Your in-house and vendor teams are also more likely to develop a personal connection and a deeper understanding of each other’s needs and operations.

Because we specialize in critical document delivery, we also understand your need to swiftly respond to your customers while maintaining regulatory compliance. With a 99.99% accuracy rate, 100% transparency, and a dedicated response team, most any changes you need can be implemented by our team much faster than a core provider—keeping both your customers and regulators happy. We also have a self-service portal where you can request changes and have our team respond within hours to give you a timeline of when the changes will be made. Our service level agreements (SLA) make sure that your statements and other critical documents are delivered on time, and we provide mail piece tracking, so you’ll know exactly when those documents are delivered. It’s the kind of white glove service that core platforms just can’t match.

Innovation Stalls with Bundled Add-Ons

When a company offers bundled services, it tends to focus on its main systems but not its add-ons. Bundling can also reduce competition in the marketplace and reduce a vendor’s need or willingness to innovate, which is why bundled tools tend to lag behind industry trends and changes in technology.

Specialized vendors, on the other hand, have to constantly improve their products to stay competitive. They’re more likely to innovate and stay ahead of trends rather than falling behind them.

For decades, cable TV providers offered bundled packages and faced limited competition, with some having outright monopolies. Reaching farther back, there used to be just one phone company across the entire United States. Complaints about services and pricing were abundant, whether you needed a technician to come to your house or you were paying too much for services you didn’t use.

The government broke up AT&T in the 1980s into several smaller companies, which allowed for more competition and innovation, a trend that grew substantially with the advent of cell phones. Cable TV now has competition from satellite dishes, wireless Internet providers, streaming services, and cell phones. The lesson here is obvious: Companies are far more responsive and innovative to their customers when they have to compete.

Unbundling Can Deliver Better Value and Efficiency

While bundling might look cheaper when you look at its bottom-line cost, it’s important to look beyond that figure and consider the impact that bundled services can have on your operations. Bundling might seem less expensive, but it often leads to inefficiencies and operational headaches.

Just as many phone and cable TV customers have “cut the cord” to avoid paying for channels or services they don’t need, unbundling can allow your bank to get much more value.

Specialized vendors can deliver better features that you and your customers use, with fewer issues and better results that can often save you money and a lot of headaches in the long term. Unbundling also gives your bank more control over its expenses, because you won’t be paying for services that you don’t need.

Unbundling can also put you in the driver’s seat when choosing among the products and services you need, because you can consider a number of options to find one that meets your expectations for quality and price. Providers who specialize in a particular service are more likely to stay on top of any changes in their marketplace and offer customizable solutions to remain competitive, as opposed to vendors who spread themselves too thin and cannot innovate.

By obtaining services from multiple providers, you can tap into the expertise and specialization that each one offers, because what they provide is a core business competency, rather than an “add-on” service that’s more of an afterthought. In doing so, you can receive responsive support from a team that has a deeper knowledge of its service than what you would find through bundling. Many of our customers also discover that unbundling can save them money because they’re no longer paying for “extras” that they don’t use or don’t meet their needs.

This not only results in fewer issues and better product features, it can also lead to faster turnarounds on any project requests while knowing that each of your providers must engage in continual product innovation to stay competitive. After all, a vendor that has to compete for your business is more inclined to meet your needs and help you keep your customers satisfied.

By unbundling, you can put together a best-in-class customer experience by choosing from among several providers to find ones that fit your specific needs.

How PrintMail Can Help

At PrintMail, we excel at providing specialized solutions for banks, credit unions, automotive lenders, and mortgage servicers. We can help you with digital and printed document delivery, as well as tax and compliance communications, plus digital and mail marketing. We invite you to contact us to discuss your current needs and future operational goals.