New Cornerstone Advisors Study Reveals Ways Core Technology Can Unlock Growth for Community Banks

Cornerstone Advisors' DCI-commissioned report finds that modern core banking technology can materially improve community-bank growth through faster digital onboarding, real-time data access and fintech integrations. Digital account-opening abandonment exceeds 50% when applications take more than three to five minutes, while roughly 60% of prospects are lost to onboarding friction; nearly one-third of community banks still process onboarding manually. Fintechs captured 56% of new checking and payments accounts in 2025, up from 49% a year earlier, increasing pressure on banks to adopt API-enabled core systems and support AI-driven fraud, retention and customer-acquisition tools.

Analysis

This is vendor-sponsored research rather than an independently validated demand signal, so it should not drive a standalone position. The investable implication is a gradual reallocation of community-bank technology budgets toward digital onboarding, data orchestration and API layers; near-term beneficiaries are more likely front-end vendors such as nCino (NCNO), Alkami (ALKT) and Q2 (QTWO) than core replacements, since banks can add workflow software before undertaking a multi-year core conversion.

For incumbent processors, the risk is not an abrupt revenue loss but slower renewal pricing and higher implementation/R&D expense as banks demand data portability and modular integrations. Jack Henry (JKHY) is relatively defensible because of its community-bank concentration and embedded client relationships, while Fiserv (FI) and FIS face greater exposure to legacy-platform perception but also monetization upside if modernization converts into higher-value payments, fraud and data-service attach rates. The 6-18 month structural winner could be the vendor that reduces implementation time rather than the vendor with the broadest feature list.

Consensus may overestimate how quickly community banks can modernize: constrained IT staffs, regulatory scrutiny and conversion risk make full-core replacement an episodic event, typically linked to M&A or major management change. A weakening deposit environment or rising credit costs would likely defer discretionary technology projects, making this a bookings-quality and sales-cycle-duration watch item rather than a broad fintech-beta catalyst over the next 1-3 months.

Key Decisions for Investors

• No immediate directional trade from this release; treat it as an alert ahead of 3Q earnings for JKHY, NCNO, ALKT and QTWO. Upgrade only if management cites accelerating community-bank implementation pipelines, improved net retention, or shortening sales cycles rather than generic AI/API demand.
• Prefer a 6-12 month long JKHY / short QTWO pair if community-bank IT budgets remain constrained: JKHY's recurring processing revenue should be more resilient, while QTWO has greater sensitivity to new digital-banking project starts. Falsify if QTWO reports material bookings acceleration and backlog conversion while JKHY's services or deconversion commentary deteriorates.
• Monitor NCNO for a more asymmetric entry after results rather than buying on this theme alone. A long becomes actionable if subscription growth reaccelerates alongside improved bank implementation capacity; the key downside signal is another guidance cut tied to delayed bank go-lives or elevated churn.
• For FI and FIS, watch renewal commentary and technology-service margins over the next two quarters. Evidence that API/data products lift recurring revenue per client would support multiple expansion; rising conversion costs, concessions, or higher client attrition would favor underweight exposure despite the apparent modernization opportunity.