41% of Community Banks Plan Core System Migration by 2028, Jack Henry Survey Shows

More than four in ten community banks plan to migrate to a new core banking system by 2028, according to a survey of 620 institutions conducted by Jack Henry & Associates. The finding represents a dramatic acceleration from historical replacement rates of 3-5% annually.

The survey identified three primary drivers: inability to support modern API integrations (cited by 67% of respondents), competitive pressure from neobanks and fintechs (58%), and end-of-life timelines for legacy systems from FIS and Fiserv (44%).

Jack Henry, which serves approximately 7,500 community and regional financial institutions, has positioned its cloud-native Banno platform as the destination for many of these migrations. But competitors including Thought Machine, Temenos, and nCino are also aggressively targeting the segment.

"The community bank technology stack has been static for 20 years. That era is ending," said David Foss, CEO of Jack Henry. "When your core cannot support real-time payments, embedded finance partnerships, or modern fraud detection, you are not just behind — you are losing customers."

The cost of migration remains the primary barrier. Respondents estimated average total cost of ownership for a core replacement at $8.2 million for a $2 billion-asset bank — a figure that has declined from $12 million estimates in 2023 as cloud-native options reduce implementation complexity.