Five years ago, when a financial institution called SRM’s sourcing practice, I could tell you almost with certainty why. They were looking to renew the contract with their core provider, improve the economics and terms, and get back to running their bank or credit union. That was how most of the conversations went. Today, nearly half of our calls are from institutions seriously considering going to market and changing providers. In my 12 years of negotiating contracts, this is the biggest shift in attitude I’ve seen. Core provider relationships offer the clearest example of this change, but the underlying issue extends across many of the payments and technology relationships financial institutions depend on. Something changed in how banks and credit unions think about their vendors, but their contracts didn’t get the memo.
What’s changed
Three things happened at once. First, financial institutions have seen their peers make the move. The Federal Reserve Bank of Kansas City reported the top three core providers, Fiserv, FIS, and Jack Henry, serve roughly 70% of U.S. banks, with Fiserv alone supporting more than 40%. That concentration hasn’t disappeared, but newer cloud-native core platforms once considered too risky, such as Mambu, Nymbus, and Thought Machine, are gaining meaningful traction, giving institutions more credible alternatives. American Banker’s 2025 research found more than 80% of banks, credit unions, and fintechs surveyed planned to increase their tech spend, with core upgrades explicitly listed as a spending priority.
Second, a new generation of leadership is stepping into decision making roles. Through our work with hundreds of client teams a year, I’m seeing new executives at community banks and credit unions that are simply more willing to bet on rapidly changing technology and newer players than the executives before them were.
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And third, dissatisfaction crossed a real threshold. The most recent ABA Core Platform Survey put overall satisfaction with core providers at 3.19 out of 5, which barely moved since 2022 when it was 3.01. Among banks with less than two years left on their core contract, more than 60% say they’re dissatisfied, yet only 19% say they’re likely to switch at renewal. That gap between how unhappy people are and how few of them act is explained almost entirely by what is buried in the contract.
The problem nobody planned for
What institutions actually find when they try to move is that the agreement they signed five or seven years ago wasn’t written for a world where switching was on the table.
Exclusivity clauses mean pulling one piece out of the stack can trigger a price increase or integration headache across the rest of the relationship. Bundled pricing lets a vendor quietly reprice everything else the moment you shop outside the bundle. Change-of-control language turns an M&A deal into a legal scramble, and liquidated damages make the early-termination math work against you even when you’ve clearly outgrown the provider.
Then there’s the trap that costs the most for the least reason: missing the renewal notice window. Miss it and you’re auto-renewed into another multi-year term at existing, usually rising, rates. No negotiation required. The fix is almost embarrassingly simple. Send written notice of termination the day you sign, before the auto-renewal clause has any teeth. Almost nobody does it.
That’s why we built a contract mapping process that looks 8 to 10 years out. You can’t see how these clauses interact when you’re reading one contract at a time. You have to lay them side by side.
Then there’s the queue
Get past the contract language, and an institution hits the implementation wall next. Core conversions routinely blow past budget and timeline, often by 50% or more, and the firms that do the work are booked two to three years out. Decide today you want to modernize, and you may not get a project started until 2028.
The Financial Brand’s 2025 Retail Banking Trends report found roughly a quarter of institutions have prioritized modernizing back-office infrastructure, even though more than half list digital experience as a strategic priority. Most institutions know what needs to change, but by the time they figure where to start there is already a multi-year wait. If your contract expires in 2027, your evaluation needs to start now, not because you’re guaranteed to switch, but because you can’t negotiate from strength without it.
Before your next renewal
- Start the market evaluation at least two years out. Waiting until 12 months before renewal means negotiating from urgency rather than leverage.
- Audit what your contract actually allows, not just what you pay. Most executives can quote their annual fee from memory. Few can say whether they’re locked into an auto-renewal or what happens if their vendor gets acquired.
- Push for renegotiation rights tied to vendor M&A, not just when your own contract expires. Ownership in this space changes hands more than institutions expect.
- Put your CTO’s roadmap and your legal team’s contract in the same room before something breaks.
- If modernization is real for you, use the conversion queue honestly. Build your timeline around when a project can actually start, not when you hope it will.
For institutions that don’t want to do any of that, there is another path, and it’s a rational one right now: consider M&A. Spreading technology costs and inheriting a modern stack are two of the biggest reasons why M&A activity surged in 2025 and has held steady in 2026.
The institutions with the most leverage are the ones who started this conversation two years before their contract forced them to. Everyone else finds out how much has changed at the renewal table, with no other options left in the room. Staying passive is a choice, but it’s not a strategy.
Cody Harrell is Chief Practice Officer, Sourcing Advisory at SRM.
