CORA Group has rebranded the banking core system it acquired from Finastra earlier this year as PhoenixWorx. The company, a subsidiary of Toronto-based vertical software firm Constellation Software, announced the relaunch on Monday, three months after purchasing a collection of banking products from the U.K.-based financial software provider Finastra for an undisclosed sum. The acquired portfolio included the U.S.-based core banking software Phoenix.
Regulatory Scrutiny of Core Vendor Relationships
The relaunch comes shortly after federal banking regulators proposed new guidance last week that would apply more supervisory oversight to third-party bank vendor relationships, particularly core providers. The proposed guidance would empower regulators from various agencies, including the Federal Reserve Board, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and National Credit Union Administration, to inspect transparency, contract structures and technology components within core banking contracts.
Paul Schaus, managing partner at bank consulting firm CCG Catalyst, told American Banker that the proposed guidance could benefit smaller vendors while challenging the largest incumbents. “I think it’s a positive for the smaller vendors and a negative for the vanguards,” Schaus said. “If a bank has an issue, failure or loss to the regulator, the regulator can go after the provider.”
According to Schaus, the high level of friction associated with switching bank core systems – which has protected the established core providers FIS, Fiserv and Jack Henry for decades – is now a supervisory topic. He suggested the proposed guidance could give CORA Group an opportunity to stand out.
“Every credible alternative becomes more valuable in that environment, and a relaunch timed to it is smart positioning,” he said. “It comes down to, in the end, an emotional decision of who banks want to work with. If a vendor gives the impression that they’re not bureaucracy hell, that’s a differentiator.”
PhoenixWorx Leadership on Transparency and Resilience
Joe Gomez, president and CEO of PhoenixWorx, told American Banker in a written statement that regulatory guidance encouraging transparency, interoperability and informed decision making can help community financial institutions remain competitive while maintaining safety and soundness.
“We believe resilience comes not only from oversight but also from openness,” Gomez said. “Community banks and credit unions value the ability to access their own data, lead their own technology roadmaps and have a say in feature prioritization from their technology partners.”
Rebrand Bundles MalauzAI and Phoenix
Tyler Brown, fintech analyst and publisher of Fintech Notebook, told American Banker that PhoenixWorx is not a new launch but instead a rebrand of established software already embedded in existing customers’ tech stacks. Monday’s relaunch bundled the previously separate products CORA bought from Finastra, including its digital banking system MalauzAI, into a single core offering.
“PhoenixWorx competes on the same terms as the big three,” Brown said, but is notably smaller and “doesn’t have the market share. Structurally, that won’t change.”
CORA acquired Finastra’s core system clients, which included approximately 200 firms such as community banks and credit unions. Josh Cook, president and CEO of Community Choice Credit Union, said in a statement that enhanced data analytics allowed the institution to form better pricing strategies and bolster revenues. “With Phoenix and MalauzAI working together, it is very intuitive and much easier to train and bring our employees up to speed to service our members’ needs,” Cook said.
Ownership Stability and Long-Term Investment
The core itself has changed hands multiple times over the past couple of decades, according to Schaus, but is currently owned by a group that divests less frequently than its previous owners.
“Constellation’s model is to hold forever, and permanence is genuinely worth something, [but] how much is debatable,” Schaus said.
Gomez confirmed in a statement that with ownership committed to long-term stability and investment in innovation, PhoenixWorx is positioned to build on the strong foundation that already exists and do so in a thoughtful way.