By W.B. King
Among takeaways from Cornerstone Advisors 2025 What’s Going on in Banking—Happy(er) Days are Here Again annual report is that credit unions value fintech partnerships in greater numbers than banks.
“Banks and credit unions are moving in different directions regarding fintech partnerships. The percentage of banks that see partnerships as a strong driver of growth has declined over the past two years from 29% in 2023 to 21% in 2024 and down again in 2025 to 16%,” noted report author and Cornerstone Chief Research Officer Ron Shevlin, who also hosts the podcast, What’s Going on in Banking. “Among credit unions, however, the percentage citing partnerships as a strong driver of growth jumped from 26% in 2024 to 32% in 2025.”
As in previous years, Shevlin, to underscore his points, borrowed lyrical phrases from admired artists like the Grateful Dead (“When life looks like easy street, there is danger at your door”) and The Turtles (“So Happy Together”). Building off the latter, Shevlin said: “For banks, creating new products/services and increasing deposit account volume remain the top objectives for fintech partnerships in 2025. Although reducing operational expenses is an important concern for banks in 2025 (and usually is every year), the percentage turning to fintech partnerships to help cut costs will decline from 43% in 2024 to 28% in 2025.”
Fintech partnership objectives are also changing for credit unions, he added. “The percentage hoping that partnerships will help them increase deposit account volume grew from 26% in 2024 to 39% in 2025,” he continued. “Nearly a third of banks with fintech partnerships currently offer money movement capabilities via partnerships, with another 31% planning to do so. Among credit unions, rewards/loyalty programs are the most common form of fintech partnership.”
FIs the New VCs
As is the case with certain credit unions serviced organizations (CUSOs), Cornerstone’s report found that many financial institutions are not simply looking for a partner but are willing to invest serious dollars in shared strategies.
“Banks and credit unions have become the new venture capitalists. Among banks that see fintech partnerships as a driver of growth, roughly a third invested in fintechs in 2024, and 4 in 10 expect to do so in 2025,” the report stated. “Among credit unions, roughly a third of those that see fintech partnerships as a strong driver of growth invested in fintechs in 2024, and 45% expect to do so in 2025.”
Core Provider Woes
When it came to researching core providers, Shevlin turned to Alanis Morissette (“Isn’t it ironic?”) for inspiration. In many cases, survey respondents were not satisfied with their current core providers. Craig Howie, CEO at the Camp Hill, Penn.-based Atlantic Community Bankers Bank shared: “The core providers have unfair control of everything. Limiting integration without paying a huge fee. It’s frustrating. Plus, it’s impossible to get their attention to do anything.”
Why is this ironic? Shevlin posits—for the past two years, year-over-year, banks’ satisfaction with core providers has increased. “Considering that satisfaction levels are anemic; I might be making too much of the increase. Not one of the six attributes we asked bank executives about reached a 50% satisfaction level.” Topping the list of gripes, he said, was “ability to help you compete in new and existing markets.” To this end, “48% of bank respondents somewhat or very satisfied. At the bottom was “product innovation,” where just 31% expressed any level of satisfaction,” he noted.
Credit unions, the survey found, also had issues with core providers. One respondent, an SVP of research for a $3 billion credit union (who chose to remain anonymous) said:
“For smaller financial institutions, fintech providers like Fiserv, FIS, and Jack Henry will never be able to provide all the customization an FI wants. These institutions get stuck leveraging whatever features their core provider gives them. The alternative is to develop and create their own or use APIs. Paying for the talent to develop and manage these systems makes it very difficult for a smaller FI to thrive, however. Whenever a core provider buys some smaller company, that’s one less competitor in the field of too few competitors. It’s frustrating.”
We Will Get By
Among other topics covered in the 59-page report is Rule 1033, a Consumer Financial Protection Bureau (CFPB) rule providing consumers with more control over their financial data; artificial intelligence applications; why it’s time to capitalize on the buy now, pay later trend; understanding the tech stack deployed-to-planned (DtP) model; and competing in the small business lending space.
Many of the surveyed credit unions executives said that perceived industry challenges should be viewed as opportunities to better serve membership. Shevlin encapsulated this notion by again referencing the Grateful Dead and its song “Touch of Grey” (“We will get by, we will survive; say your peace and get out”).
“While it’s human to vent our frustrations, financial institutions embrace too much of a ‘woe is me’ attitude towards change. We forget that we are the gatekeepers of modern life,” said Evan Mulcahy, AVP of digital experience at the $2 billion Oregon City, Ore.-based Advantis Credit Union. “People need us in order to access the financial system—a necessity to get anything done today. Change will come. Rise to the occasion and innovate or get left in the dust.”
As Shevlin looks forward, he notes that 80% of surveyed bankers are optimistic about 2025. “While it might be a stretch to claim that happy days are here again, at least we can say that happier days are here,” he continued. “This year, financial institutions look to set sail on much calmer seas to explore ways they and their technology providers can plan for the changes and challenges ahead.”