Core systems

Asset growth drove the Pennsylvania bank to create software that helps it vet and monitor vendors, with automated tracking of contracts and deadlines and storage of supporting documents.

As community banks need to make their budgets stretch further, some are looking to vendor consolidation as a way to gain a competitive edge through fewer IT headaches and a more uniform customer experience.

There are benefits for banks in fintech collaboration via application programming interfaces, but financial institutions should not let go of customer engagement.

Fintech is a chic topic at Davos, but it's barely a blip on the radar of analysts who lock in on hard numbers during earnings calls. Yet with tech taking a bigger role in financial services, mobile banking or the blockchain might soon become as topical as efficiency ratios or net interest margins.

Calls with analysts to discuss the fourth-quarter results were dominated by questions about energy exposure, efficiency and the growing worry about when the next credit cycle may begin. Still, some banks managed to get in a few thoughts about how technology is reshaping their businesses.

Banks' core systems are like spaghetti — a mess of noodles. They need to find ways to be more structured,, says Hanspeter Wolf, CEO of onboarding software vendor Appway.

The project is likely to be mirrored at banks around the country as the automated clearing house evolves from settling payments in three to five days currently to same-day settlement in September and faster payments beyond that.

Implementing discrete changes to a core system to compete with disruptors is merely dressing up an arsenal that really should be replaced or overhauled.

The blockchain could move from testing to reality, APIs are likely to expand, and more functions will move to the cloud as banks look for ways to fend off fintechs in 2016.

Suffolk Bancorp in Riverhead, N.Y., has hired Fiserv as core processor and it plans to record a $1.4 million charge to cover the vendor switch.

The Federal Housing Finance Agency appears to be on course to decide next year whether Fannie Mae and Freddie Mac should update their credit scoring models.

Ramamurthi has transformed a 123-year-old institution with one branch serving a dusty Kansas town into a seedbed for disruptive financial technology — not to mention a wildly profitable generator of fee income.

Under the direction of Richard Holbrook, Eastern Bank has prepared itself for the next 200 years by embracing a culture innovation, adding scale through acquisitions and advocating for the less fortunate in its community. It's an unusual formula, but it has worked and that's why he is one of American Banker's three Community Bankers of the Year for 2015.

The core-processing vendor FIS wants to dream big like fintech startups when it comes to developing future services, but it also seeks to be large enough to offer multiple services in an era when banks are cutting back on third-party providers.

Bank of the Ozarks' taste for M&A means its information-technology staff has to juggle integration projects and experiments with new software, mobile and other technologies.

Royal Bank of Canada's chief executive, Dave McKay, says the company could roll out a loyalty system kept on a blockchain next year as it experiments with distributed ledgers and looks to enhance its mobile wallet.

Legacy core systems make banks vulnerable to new competitors and risks. Modernization is underway, but many institutions are not moving fast enough. The risk of waiting too long is that it will take too long to catch up.

Financial services technology company Fiserv and bank-owned risk management provider Early Warning are partnering to add scale for deposit accounts and bill payment services.

So many banks are running systems that were implemented before 1984, the year Mark Zuckerberg was born. They’re going to be dead meat in the age of real-time connectivity in the near-free world of today’s mobile Internet.

The chiefs of Fiserv, FIS and TCS Financial Solutions explain how they continue meeting customers' current needs while preparing for the inevitable day when those needs radically change.