Regulators Moved the Goalposts. Now Go Win Your Next Core Contract Negotiation.

A new joint statement arms community banks with language to challenge core vendors on contract terms, transparency, and accountability.

Mid-sized banks rarely enter core negotiations on equal footing. The vendor brings more scale, knows more, and leverages both. A September 11 joint statement from the OCC, Federal Reserve, and FDIC confirms what banks already feel: concentrated market dynamics shrink their negotiating power, block access to due-diligence information, and make holding providers accountable an uphill fight.

The agencies didn't stop there. They acknowledge that a few [select] vendors dominate the market and impede banks' negotiating power, and they've signaled that supervisors will now treat these market realities as context when examining core-provider services and evaluating whether such practices contribute to unsafe or unsound conditions.

How high are the stakes? The agencies call core provider relationships mid-sized banks' "most material, complex, and highest-risk third-party relationships." And "core provider" incorporates far more than just core processing: it covers transaction processing, account management, payments, CRM, compliance and reporting, online banking, and other critical functions.

How Banks Can Push Back and Win

Don't just clip the statement to a renewal request and wait for concessions. Use the agencies' own words to hold the line in negotiations.

This relationship is material enough to put executives and the board on notice. Banks need the information to run real due diligence and ongoing monitoring. Contract terms should enable sound risk management, not obstruct it. Core providers should also be accountable for service quality, resilience, security, and transparency.

Take this opportunity to reset the conversation from “standard contract terms” to language appropriate for one of the bank’s highest-risk relationships.

The Six Core Contract Provisions Banks Must Revisit

The core contract provisions banks must give their time and attention to include:

• Data access and portability
• Service levels and accountability
• Pricing and billing transparency
• Change management
• Security and resilience
• Termination and conversion rights

The single most important move a bank can make? Start well before the contract’s renewal. Leverage erodes as renewal deadlines close in, especially when the institution hasn't done the homework to understand its alternatives.

Banks should build in enough runway to evaluate the current relationship, document pain points, review invoices and commitments, assess market options, and construct an executive negotiating position.

And don't confuse a transition plan with something that starts after the ink dries. It begins the moment the institution defines what it needs from the relationship and what it can no longer afford to accept.

The Playbook: What Banks Should Do Starting Today

The proposed interagency third-party risk management guidance is open for comment through November 16, 2026. Banks can use this window to share concrete experiences, including unavailable due diligence information, inflexible terms, confusing billing practices, barriers to data access, conversion constraints, or limited accountability.

Comment submission can help inform the broader industry conversation, but contract preparation remains an institution-level action and responsibility.

Approaching a core renewal or evaluating your options? Engage fi assists financial institutions with core contract pricing, terms, conditions, and full evaluations. Show up prepared and remain in control at the negotiation table.