Historically, legacy banking platforms and systems have been quite successful when it comes to reliability. Failures are sparse, with some banks going without an outage for months, if not years.
However, with the arrival of digital banking, APIs, and the cloud, banks have witnessed a significant shift in how products and services are constructed.
Now, banks are expected to process transactions in real-time, release new features frequently, and be able to scale their infrastructure at will, all while providing exceptional customer service.
Needless to say, older banking systems – typically designed with reliability in mind rather than open architecture – can no longer cut it in a market driven by customer satisfaction and digital transformation.
Enter core banking solutions (CBS), a new-age way to align banking functions across branches and new digital channels to pave the way for efficient operations and effortless customer experiences.
Let’s explore what these solutions are and understand their value proposition.
What are Core Banking Solutions/Core Banking Systems?
Short for Centralized Online Real-time Exchange, a core banking system is the back-end infrastructure that processes banking transactions across various bank branches, allowing customers and businesses to manage their financial transactions regardless of their home branch.
It operates on a central server, providing services over the Internet, including transaction processing, loan management, and online banking. It can be thought of as the backbone of a bank’s operations.
The key advantages of core banking system include:
- Streamlined Operations: Core banking systems optimise bank functions to meet customer expectations and respond to sector consolidations.
- Agile Product Development: Banks can introduce and modify financial products quickly, keeping pace with competitive market trends.
- Enhanced Data Handling: Core banking software facilitates efficient data management, aiding in swift and strategic decision-making processes.
- Boosted Productivity and Customer Relations: The automation of routine tasks frees up staff to concentrate on value-adding activities and improve interactions with customers.
- Error Minimization and Efficiency: By unifying banking processes, these solutions reduce discrepancies and promote smooth, interconnected services.
In a nutshell, core banking solutions are a win-win for all parties involved – customers and businesses can enjoy the convenience of on-the-go banking. At the same time, banks streamline their processes and conserve valuable time, resources, and, of course, money.
Challenges of Implementing a Core Banking Software
Transitioning to a core banking software is a big move for any bank and comes with its fair share of challenges, like:
- System Integration: Seamlessly integrating the new core banking system with legacy systems without disrupting daily operations is a significant technical challenge.
- Data Migration: Safely transferring data from old systems to the new platform carries the risk of data loss or errors, requiring careful planning and execution.
- User Training: Employees must be trained to navigate the new system efficiently, which involves dedicated training, time, and resources.
- Regulatory Compliance: The new system must comply with all relevant banking regulations, which requires careful alignment with the compliance standards.
- Financial Investment: Implementation and ongoing maintenance of a CBS is a hefty financial investment, which can be a barrier, especially for smaller banks.
Opting for a cloud-based core banking software can help you overcome many of these challenges.
As we look at the trajectory of banking solutions, it’s clear that the industry is moving towards more integrated, customer-centric, and technologically advanced systems. Core banking solutions have revolutionised how banks operate, breaking down operational inefficiencies, unifying bank functions, and saving essential time, resources, and money.
Tap into these benefits and more with iGCB’s Digital Core, a comprehensive core banking software powered by our signature eMACH.ai – built to provide a contextual experience for the savvy customers of today. From an integrated banking suite to workflow-based processes, AI/ML for risk analysis, and an intelligent behavioural model, reinvent your banking infrastructure with intelligence, integration, and innovation. Learn more here.