Banking middleware is software that sits between a bank's customer-facing channels, such as mobile apps, online banking, branches and ATMs, and its back-end systems, chiefly the core banking system and the payment networks. It passes requests and data between them, translates formats and enforces security checks. It is the banking form of the general software layer explained in full in the Middleware entry.
Banks rely on middleware because their core systems are often decades old and were not built to talk to modern apps or partners. Instead of rewriting the core, a bank places middleware in front of it and exposes services through APIs, which also lets fintech partners connect. Middleware is also used to convert payment messages between older formats and ISO 20022, the standard that most large payment systems have adopted.
In banking-as-a-service, the term is also used for platforms that sit between a sponsor bank and many fintech companies, a position that brings its own risks when records are kept by the middleware firm rather than the bank.