7 tips for choosing your new Core Banking 💡

Whether you want to launch a new bank from scratch or modernize the core technology of an established bank, choosing a Core Banking solution should not be taken lightly.

In fact, before building a Core Banking, you must complete a thorough internal analysis regarding your choice to move in this direction in order for the system to perform as advertised. To help with this preliminary analysis and avoid any disappointment, here are 7 tips for choosing your new Core Banking.

1- Be customer-centric: Place the end-user at the center of your project 🙋‍♂️

Because the first Core Banking were generally based on a silo approach, data stored in the old core banking system is often distributed and redundant.

In such circumstances, it will be necessary to implement master data management procedures in order to have one coherent, complete, and therefore, usable database, meaning with a Single Customer View (SCV).

By doing so, you are ensuring that the end user’s data is not segmented but is complete and synchronized in real-time. You place the end-user at the center of the project by combining data from multiple contact points (silos) and organizing it centrally and efficiently into a Single Customer View.

2- Adopt an agnostic technology 👨‍💻

To access your financial services, your customers are now using more and more channels that are constantly evolving (mobile, third-party applications, bank account aggregators, etc.) and whose programming languages are various and sundry.

In order to guarantee that your next Core Banking will integrate well with those channels, as well as with the partners in your ecosystem and all the devices involved, you need to ensure that the technology and languages chosen to develop the solution are all compatible.

By doing so, you will avoid ending up with technology that becomes obsolete a few months after implementation. Instead, you will benefit from the many advantages of a versatile solution that’s easy to maintain and able to ride each new wave of innovation.

3- Choose a cloud-native solution ☁️

With the development of digital technologies, the cloud has become more and more indispensable in the world of financial software. As of late, this is even more true, given the changes in our work and consumption habits brought about by the pandemic.

Although very few financial players can now forgo the numerous advantages offered by the cloud, currently, many are content just to move their on-premise solution to the cloud. While this is indeed a step in the right direction, it is not enough.

To fully leverage this revolutionary technology’s potential, it is better to invest the time to create a native cloud solution instead of simply moving an existing on-premise solution to the cloud. A native cloud solution gives you remote access so that you can quickly launch or terminate features and programs from anywhere. In addition, to reduce costs, servers can be disabled when they are no longer needed.

4- Integrate compliance from the start

General Data Protection Regulation (GDPR), Payment Services Directive (PSD2), Markets in Financial Instruments Directive (MiFID), and so on. There is no shortage of regulatory constraints for financial services, and compliance with the associated reporting obligations is a major challenge and a significant cost factor.

It is essential to have a Core Banking that supports proper fulfillment of compliance obligations so that you comply with in-force legislation. Compliance processes that function well can also help to gain a competitive advantage. Such processes encourage you to protect user data, manage user consent, and provide real-time data retrieval by automatically generating on-demand reports of the information you need.

A Core Banking must have strong customer authentication. In addition, such a system must master the subtleties of consent, prioritize regulatory and compliance and audit functions, and easily support integrations via APIs. Finally, a Core Banking must offer a Single Customer View.

5- Choose a fully scalable solution 🚀

Today’s new technologies make it much easier to deploy a banking service on a large scale. However, not all solutions have the same degree of scalability!

Although machines and automation have succeeded in replacing humans to perform many repetitive and time-consuming tasks, the maintenance costs of these solutions can be high when it comes to growing the user base or supporting new products.

However, contrary to popular belief, new technologies are rarely the most expensive to maintain. On the other hand, technology costs can skyrocket when an older generation Core Banking requires programming skills that were popular a few decades ago but are now dying out.

As a result, you should choose a Core Banking that is highly automated, capable of taking full advantage of cloud efficiency, and able to operate with relatively few resources using a lean core approach.

6- Opt for modular architecture

Users demand a high level of responsiveness from the financial services industry. In addition, new banking offers must be increasingly flexible to meet customization requirements. Therefore, new Core Banking must be totally agile.

To achieve this, it is better to opt for modular architecture to make it easier to work on a single module without impacting the stability of the whole system.

Moreover, to respond to a given problem, your new Core Banking should use standardized elements to the greatest extent possible rather than customized elements since the former can interact with the entire architecture. In contrast, the latter can only be used in certain very precise circumstances.

In order to integrate partner functionalities on any layer, it is advisable nowadays to choose a Core Banking Platform with separate and independent middleware and front-ends, both of which can use universal APIs and connect to third parties independently. As such, they can easily design products with a core logic.

Il est dorénavant conseillé de choisir un Core Banking Platform avec un middleware et un front-end séparés et indépendants (afin d’intégrer les fonctionnalités partenaires sur n’importe quelle couche), et capable d’utiliser des APIs universels, de se connecter à des tiers de manière indépendante et de concevoir facilement des produits avec une logique de Core.

7- Keep it simple! 🔥

As is often the case when the subject is complex, remember to keep it as simple as possible. Using a fundamentals-only approach and a minimalist architecture will indeed be the best way to avoid finding yourself in charge of a labyrinth that is difficult to run.

Finally, just as simplicity should be the driving factor in operating a Core Banking, this principle should also apply to the software design process. During this stage, it is preferable to limit the number of spokespeople and service providers to a strict minimum in order to facilitate management of the project and drastically reduce the time-to-market.

Today’s technical principles (such as modularity) reduce this complexity through transparent and independent development of system components. This means that updates and new functionality can be developed without disrupting the entire Core Banking Platform.

The evolution of Core Banking

Banks must operate on agile and flexible Core Banking Platforms in this new digital era to build differentiated customer experiences. Thus, the heart and soul of today’s bank must be transformed into a data engine with a process-centric vision in order to provide a transparent and clear picture of each customer.

Now, with highly automated, cloud-native, modular Core Banking Platforms, financial institutions can finally break free from rigid solutions of the past by choosing to make the necessary investment in their technology.