Letter to the OCC on Community Banks' Engagement with Core Service Providers and Other Essential Third-Party Service Providers

To Whom It May Concern:

The American Bankers Association (ABA) appreciates the opportunity to comment on the OCC's Request for Information Regarding Community Banks' Engagement with Core Service Providers and Other Essential Third-Party Service Providers (RFI). In issuing the RFI, we are pleased that the OCC has considered comments on its May 12, 2025 RFI on community bank digitization, and now seeks to better understand how challenges in third-party relationships affect community banks' ability to remain competitive.

As the OCC considers policies to support bank modernization, this RFI is an opportunity to gather insight into both the benefits and sources of friction that banks experience in their relationships with third parties. To promote consistency in policy and supervision, we urge the OCC to coordinate with the FDIC and the Federal Reserve to consider comments on this RFI in conjunction with related initiatives, such as the 2024 interagency RFI on bank-fintech arrangements. A unified approach will help to promote consistent policy and supervision across different charters.

While the RFI focuses on community banks with assets under $30 billion, the issues discussed in this letter apply to banks of all sizes, including regional and mid-size banks.

Finally, we note that a substantial portion of this letter discusses the challenges that some banks have encountered with their core service providers and the extent to which those challenges discourage bank innovation. While these issues are common, they are not universal. In 2019, ABA's Core Platforms Committee developed Principles for Strong Bank-Core Provider Relationships (Principles) to articulate reasonable standards under which a bank's relationship with its core service provider can thrive. Twenty-one core service providers informed ABA that they are committed to supporting the Principles. Since that time, some core service providers have committed more fully than others to making changes in support of the Principles.

Download the comment letter to read the full text.