Choosing the Right Core Banking System: What Matters Most to Bankers

In the ever-evolving world of finance, the selection of a core banking system is no small matter. This choice holds the power to shape a bank’s efficiency, customer satisfaction, and adaptability to a dynamic market. So, what exactly are bankers seeking in their ideal core banking platform?

Let’s embark on a journey to explore the key factors that sway their decisions.

Understanding the core banking platform

Before we dive into what bankers are looking for, let’s first clarify the essence of a core banking platform in modern terms. At its core, this software is the digital engine that tracks and processes every transaction within a bank. It’s the technology that underpins daily operations, from customer interactions to strategic growth initiatives.

Core banking technology can manifest in two primary ways: as standalone software components enabling specific functions or as an integrated platform that covers a wider spectrum of banking operations. Many banks prefer the latter for its convenience and to avoid disjointed processes. Moreover, the advent of open banking and the use of APIs to integrate third-party technologies allows core banking platforms to expand their capabilities, offering a diverse range of financial products. This adaptability is crucial in a competitive landscape where attracting deposits can be a challenge.

Factors influencing a transition

Financial institutions may consider switching core banking platforms for various reasons, often when their existing contracts come to an end or if they are dissatisfied with their current technology providers. However, such a transition is a significant undertaking, requiring careful consideration, as it can overhaul business processes and involve substantial financial and time investments.

The driving factors behind the decision to switch can include cost considerations, satisfaction levels with existing technology suites, and cultural alignment with the provider. Choosing a new partner demands extensive discussions and involvement of key stakeholders within the bank.

Essential functionality of a core banking platform

Bankers have a penchant for the integrated core banking platform primarily because it eliminates the need to engage with multiple vendors and disjointed systems. Hence, it’s no surprise that comprehensive product suites and functionalities top their priority list when seeking a new core banking system. These core contracts often span decades, so the chosen vendor’s technology should be capable of evolving with the bank over time.

A core banking platform must offer a wide range of functionalities to support various banking operations, including customer onboarding, account management, deposits, loans, payments, and reporting. It goes beyond basic data processing, focusing on providing customers with 24/7 access to their money, which includes seamless integration of digital banking solutions to rival larger institutions and digital experiences elsewhere.

Maximizing return on investment

Banks assess the cost-effectiveness of a core banking platform by considering factors such as the initial implementation investment, ongoing support costs, and potential customization or integration expenses. The most favorable deals often come from core vendors or their partners, as they entail fewer implementation and integration steps.

Balancing cost and value requires strategic input from all stakeholders, coupled with comparisons across different technologies. Investments in technology ultimately aim to save money, whether through responsive cloud-based architecture that reduces hardware costs or streamlining processes like onboarding to help customers access their accounts more quickly.

Customization & ease of use

Bankers seek a core banking platform where all banking functions fit seamlessly together and interact cohesively. The platform should be user-friendly, offering search functionality, easily understandable data, accessible tutorials, and reliable service representatives to assist as needed. User experience (UX) design principles play a significant role in the platform’s usability, with aesthetics, logical hierarchy, straightforward language, and accessibility being key factors.

Many banks prefer some level of platform customization to enable frontline staff to execute common tasks more efficiently. An easy-to-use testing environment is another essential feature, as it streamlines training for employees and ensures a smooth transition.

Reliability & stability

Given the critical nature of banking operations, banks require a core banking platform that is highly reliable and stable. It should handle high transaction volumes, process requests accurately and efficiently, and maintain uninterrupted service availability. Any service interruptions should be swiftly and effectively resolved.

Moreover, banks insist on stringent security measures, including data encryption, access controls, audit trails, and compliance with regulatory standards. The platform should also offer robust security protocols, monitoring capabilities, backup, and business continuity features.

Quality and accessibility of data & analytics

Data and analytics have become paramount in the banking sector, with many respondents in a recent survey listing them as top investment priorities. Access to core data is invaluable for banks, as it provides insights into customer behavior, performance indicators, and regulatory reporting requirements. Therefore, robust reporting tools, account analysis, and data-driven insights into customer profitability are essential.

The use of data varies depending on the banker’s role, from high-level reporting and trending for managers and C-suite executives to ad-hoc reporting for marketing and sales teams. Customer relationship management (CRM) data can offer efficiencies by tracking customer behavior and transactions, while performance analysis of branches and officers provides valuable insights.

Scalability & flexibility

Regardless of whether banks are currently in expansion mode, they seek a core banking platform that supports growth and can scale accordingly. This includes accommodating increased transaction volumes, additional branches, and new products or services. Banks often consider a core provider’s track record in working with similar financial institutions and review the platform’s product roadmap to align with their strategies.

Extensive API catalogs and support for third-party technology integrations contribute to flexibility and agility, allowing banks to respond quickly to market demands, regulatory requirements, and technological advancements.

Tight integration of all banking systems

Banks rely on various systems and applications to support their operations, and effective communication among these systems is essential. A cohesive core banking platform enables easy data transfer, reduces expenses, accelerates account opening, and facilitates the launch of new products. It enhances the overall user experience by ensuring that all components, even those added later or by different vendors, seamlessly fit into the technological ecosystem.

Integration also plays a pivotal role in achieving a consistent user experience across digital platforms, ensuring that customers enjoy the same level of service whether they use a phone, laptop, or tablet.

Core vendor support & expertise

Finally, the reputation, track record, and service offered by the core banking platform vendor are crucial considerations. While system functionality is important, banks often base their decision on which vendor will make the best partner in terms of innovation strategy and culture alignment.

Vendors should demonstrate knowledge of market trends, have a well-thought-out roadmap, and share a culture that aligns with the financial institution. Assessing vendor suitability involves reviewing industry reputations, quality of interactions, and references from other bankers. Support and reliability during technological implementations are also key factors, as banks require responsive assistance and dedicated personnel to address their concerns.

Conclusion

There may not be a perfect platform or vendor, but by carefully evaluating core banking technology, banks can empower themselves to thrive in the digital age. They can deliver exceptional customer service, adapt to market changes, and foster a lasting partnership with their chosen technology provider. The right core banking system can be a cornerstone of success in an industry that continually evolves. To explore this topic in greater depth, be sure to check out our definitive guide to a modern core banking partnership.

Build a core banking platform with Digicore

There is so much to gain from building a resilient core banking solution. If you intend to build one, your first step is to work with a highly capable fintech development company.

Digicore develops customer-centric financial technology solutions that meet ethical and legal guidelines, and help financial institutions achieve their key business objectives. If you are looking to build a gamified fintech solution, get in touch with us today, and let’s get started.