Core Surgery: How Banks Are Replacing Their Cores

In July 2021, First Horizon Corp. bought IBERIABANK Corp. and launched an experiment that few banks of its size have attempted: a conversion to an alternative core provider.

But the $88 billion banking company based in Memphis didn’t want to replace its core, the basic nervous system of the bank. It wanted to replace the core of a virtual bank acquired from IBERIABANK. Doing so would allow First Horizon to test the waters with Finxact, a cloud-native core that offers banks a fully open architecture to pick and choose what software and services to offer customers, providing the chance to quickly update and offer new products as customers’ needs change.

Finxact had all the bells and whistles of a modern system. “The way someone designed a mainframe 30 years ago isn’t dictating what we’re doing today,” says Tyler Craft, senior vice president and head of First Horizon’s VirtualBank.

Although a few brave souls such as Seattle Bank have accomplished a complete core conversion to a modern, alternative core such as Finxact, some others are testing the waters with partial conversions. While a complete core conversion to an alternative core may feel time consuming and risky, there are a variety of options, including First Horizon’s approach. An increasing number of banks are trying their options.

In fact, it was First Horizon CEO Bryan Jordan who first put that image in my head of an operating table and a skilled surgeon going to work on the very cord that makes the bank function. “This is probably not a great analogy, but changing your core system is, in my mind, about as complicated as a spinal transplant,” he says.

This report delves into why and how some banks have leaped off that cliff, the strategies for success, how to get buy-in at your bank and what to ask potential core providers.

To learn more, download our FinXTech Intelligence Report, Core Replacement: How Banks Are Replacing Their Cores.