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Fear Not, FIs: the FiServ/FirstData merger doesn't have to stifle innovation

Fiserv is spending $22 billion to acquire First Data in a deal to build Fintech scale. What does this mean for Fiserv’s core banking clients? While they’re likely to benefit from the combination of financial technology and payment processing giants in the long run, in the short term many banks and credit unions are worried that disruption is likely to result from the massive integration and cost-cutting effort the two firms will be embarking on.

So what can Fiserv’s core banking clients do to ensure their own efforts to add innovative products and services don’t bog down while their core provider is otherwise occupied? Here are three steps they can take to maintain their speed-to-market:

1. Prioritize innovative solutions that already have a path to integration.
Teams building disruptive fintech solutions in the venture-backed start-up space understand the critical nature of integration functionality with systems already inside banks and credit unions. The really smart ones have already created relationships with the "Big 4" core providers to shorten their path to sales.

Our client, WalletFi, participated in an industry-leading corporate accelerator that introduced them to top core providers, and integrating with them has been a key component of the development work Core10 has done as part of their team. "Our solution to recurring payment management is at its most powerful when integrated into the digital banking platform of a bank or credit union. Core integration is essential to our success, and we're fortunate to have a key core provider in our corner, providing tools for our development team to leverage," said Marc Miller, COO of WalletFi.

2. Build internal capacity to integrate.

While this solution doesn't work for every institution, it may make sense to build an internal team that can largely substitute for your core provider in terms of integrating new functionality with the core system. Existing resources can be dedicated to these types of projects, as well.

If you don't have the budget or appetite for a full-time team of technology resources, or your integration work is more sporadic than constant in nature, you can look to outside partners to solve the issue for you.

3. Find a partner with core banking integration expertise, eliminating the need to rely on the core provider.

Core banking integration doesn't have to be done by a core banking provider. In fact, most cores provide access to APIs for use by banking development teams and their partners, making it easier than ever to integrate.

FIS provides access to its core through its open API Code Connect, and has also recently created an innovation center for mobile payments called The Garage. Jack Henry's jXchange and SymConnect, as well as the Synergy integration toolkit for document management are just a couple of the company's API offerings. Fiserv has a number of APIs, from ACH to digital disbursement to open banking. Finastra also provides a developer sandbox with a number of APIs.

Further, working with an independent partner is often much less expensive than working with a core provider's professional services team.

Core10 utilizes a model we call hereshore to make core integration projects even more budget friendly. We've worked with the "Big 4" and some not-so-big players as well. We employ smart, humble, hard-working people with technology skills who want to live and work in small US markets, where the cost of talent is priced right for our clients. Our Huntington, WV and Martin, TN teams have built solutions for billion dollar core banking providers, from right here in the heartland.

What does this mean for you?

Whether you're nervous about the Fiserv/FirstData merger or not, it helps to understand there are several options for keeping your bank or credit union's integration roadmap on track. You can be on the lookout for integration-ready fintech solutions, staff or skill up internally, or find a partner with the expertise you need at a price that's right.

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