Fiserv and two competitors— Fidelity National Information Services Inc., FIS 0.46% known as FIS, and Jack Henry & Associates Inc.JKHY 0.75% —are little known outside the banking world, but their infrastructure now makes up much of the modern banking system’s financial plumbing, especially for smaller banks. They provide the technology behind everything from keeping track of customer deposits to powering mobile apps. As the number of community banks has shrunk, the three companies have grown, partly through acquisition of other tech providers, in both revenue and profit.

These companies, known as “core providers,” say they can affordably bring to small institutions big-bank technologies, including the newest tools such as open-data platforms and on-demand services.

But discontent is starting to simmer at the small banks that most depend on them. Smaller lenders and some industry groups say the service providers’ onerous contracts and sometimes mediocre digital offerings have made it harder to keep up with big competitors. Executives at some small banks say they feel like they are becoming franchises of the core providers because they are so reliant on their technology. Firms are filing lawsuits, turning to financial-technology startups and trying to negotiate as a group for better contracts.

Read More.. Source The Wall Street Journal

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