As digital solutions become the expectation for consumers across every industry, banks have found themselves caught in a whirlwind of complexity.
In order to innovate and stay competitive, banks need to add more technology and enable customer-first fintech partnerships. The looming challenge for many banks, however, is the choppy relationship they have with their core banking platform. In many cases, this is either slowing or preventing their growth. According to the ABA, 42% of banks surveyed are dissatisfied with their core provider.
Middleware stands as a beacon for banks that are navigating the intricate responsibility of:
Managing diverse providers.
Connecting disparate technologies.
Ensuring a seamless, secure flow of data from one system to another.
Modernizing a mammoth core.
Imagine taking the tangled web of modern banking—with all its competing demands, different platforms and varied customer needs—and weaving it into a coherent and unified experience. That’s the promise of middleware. And the more chaos a bank faces, the more powerful and essential a middleware solution becomes.
Join us as we dive deeper into the benefits of middleware technology and how to choose the right solution for your bank.
Middleware is like a translator, helping different parts of a computer system to understand each other. Core banking systems don’t generally speak the same “language” as customer-facing systems. Middleware takes the information from one system, translates it, and sends it to another system so that everything can work together smoothly. It’s an essential tool for connecting different technologies within the bank, making things more streamlined and efficient.
Middleware offers banks a pivotal path to innovation and efficiency by providing a flexible and secure platform for integrations. The benefits of middleware can significantly impact the success and growth of a community bank in today’s digital era.
Reduces Reliance on Legacy Cores: Analysts estimate that two in five U.S. banks use legacy core systems that are nearly 40 years old. In many cases, those core apps are no longer being supported or enhanced by the tech companies that sold them. This is a condition referred to as a “zombie” core. Middleware offers a way to bypass these often outdated and rigid systems, allowing for quicker and more flexible operations.
A Single Source of Truth for Customer Data: Middleware consolidates data from various sources into a unified format. This centralization ensures that customer data is consistent and accurate across all systems, which enhances customer service.
Facilitates Partnerships With Fintech Companies: Middleware allows banks to easily integrate with fintech partners, offering opportunities for collaboration and innovation. These partnerships can provide banks with access to cutting-edge technologies and new customer offerings, keeping them competitive.
Cost-Effective Scalability: By providing a unified platform for integration, middleware can save banks significant resources in terms of time, effort, and money. This not only makes the implementation of new technologies more cost-effective but also allows for scalable growth.
Enhanced Security: Middleware can offer robust security measures, ensuring that data transmitted between various systems is protected. This security aspect is vital in today’s world, where cyber threats are a constant concern for financial institutions.
Improved Customer Experience: Whether it’s faster service, more personalized offerings, or better access to information, middleware plays a central role in meeting and exceeding customer expectations.
Choosing the right middleware technology is a multifaceted decision. You should start with a clear understanding of your bank’s needs, goals, and capabilities. By carefully considering the following factors, you can choose a middleware solution that will enhance your operations, drive innovation, and support your bank’s growth.
1. Team Expertise: Evaluate whether you have someone on your team who understands how to manage and implement middleware. There are no- and low-code options, but there still needs to be someone the bank can directly access who understands the integrations. If not, you may need to invest in training or consider hiring a provider that offers robust support and guidance.
If you need to outsource management of your middleware, be sure to consider:
The terms of the contract.
The total cost of ownership.
The all-in ROI.
2. Integration Needs: Assess how middleware will connect your existing systems, fintech partners, and any future technologies you plan to implement. Pre-built integrations can be helpful. But also consider whether the middleware offers the customization and capabilities to align with your operations.
3. Maintenance and Upgrades: Consider the ease of maintenance and potential upgrades. Will you be able to maintain it in-house, or will you require ongoing support from the vendor? How often will upgrades be needed, and what will they entail?
4. Costs: Analyzing both initial and ongoing costs is crucial. Consider the total cost of ownership, including licensing, implementation, maintenance, and potential future upgrades. Compare these costs against the expected benefits and ROI.
5. Compliance and Regulation: It’s important to choose your partner wisely and ensure that the middleware meets all industry standards for regulation and compliance. This includes data protection regulations, privacy laws, and other relevant financial industry standards.
Look at the vendor’s reputation in the industry, customer reviews, and case studies. Evaluate the level of support they provide, including technical support, customer service, and any additional resources or services that might serve your organization.
6. Automation: Your middleware shouldn’t stop at new partnership connections. It should also automate internal processes that are impacting your customer and lender experience.
7. Scalability: Assess how well the middleware can scale with your bank’s growth. Can it adapt quickly to handle more data, more connections, or more complex integrations as your bank evolves? For instance, if you want to add a fintech to your ecosystem, look for a solution that can speed up the process of setting up the application and connecting it to the core.
Mesh is a cutting-edge middleware solution, tailor-made for banks and fintechs. Recognizing the unique challenges that banks face in today’s complex environment, Mesh connects to a bank’s core and creates a seamless pathway where third-party partners can connect. With an emphasis on flexibility, security, and scalability, Mesh enables banks to innovate without being restricted by legacy banking systems.
Encore Bank recognized the need for a core banking solution that would overcome its specific challenges and align with its ambitious digital banking strategy. After a thorough evaluation, Encore Bank chose Mesh for its remarkable compatibility, scalability, and security features.
“We decided that Core10 needed to house all our data, and we wanted to have connectivity between all of our systems,” said Erin Simpson, COO of Encore Bank. “We also wanted the ability to integrate more quickly and have portability as technology changes.”
The implementation process has been smooth and efficient, thanks to Core10’s commitment to customer support and its understanding of Encore Bank’s unique landscape. The outcomes were nothing short of transformative:
Seamless Integration: Mesh successfully bridges Encore Bank’s systems with new applications, eliminating bottlenecks and enhancing efficiency.
Innovation and Growth: With Mesh, Encore Bank now has to ability to create products and services that would attract digital customers. In fact, from a combination of Encore’s digital and partnerships strategies, the bank’s asset size has grown organically from $165 million to $3.85 billion.
Customer Satisfaction: By enabling a single source of truth for customer data and enhancing the ability to offer new services, Encore Bank can expect to see a noticeable increase in customer satisfaction and loyalty.
The success story of Encore Bank and Mesh is a testament to the power of the right middleware solution in overcoming the complex challenges of the modern banking environment. Learn how Core10 can help you directly connect your core with new revenue-generating partners all in one platform.