Core Banking: Lessons from a Long and Winding Road

Let’s start with a confession: core banking wasn’t part of my original career plan. I actually began my professional journey as a scuba diving instructor, with a passion for exploring the far reaches of the world. So, how did I end up talking about core banking systems for 30-odd years? The answer lies in a series of fascinating twists and turns—and the lessons I’ve picked up along the way.

Whether you're just beginning to think about modernising your core banking systems or you're deep into transformation, here are a few things I've learned that remain as relevant today as they did when I started out.

1. The Core Is Still the Heart

Despite all the talk of cloud, AI, and digital-first strategies, the core banking system remains the beating heart of any bank. It’s the engine that powers everything else, from customer transactions to regulatory compliance. While banks have changed how they interact with customers, and technology has leapt forward, the need for an efficient, secure, and compliant core hasn’t gone anywhere.

So, if you’re contemplating a transformation, don't be lured by the shiny new tech without remembering the foundation you're building on. It’s not glamorous, but it’s essential. You can layer the coolest, most cutting-edge digital channels on top, but if your core isn’t solid, none of it matters.

2. Every System Has a Story

Every core banking platform has a legacy. These systems weren’t just plucked out of thin air; they’ve evolved over decades, shaped by the business needs, customer demands, and regulatory requirements of their time. When thinking about transformation, it’s important to respect this history. It’s easy to criticise older systems, but they’ve been doing the job (and doing it well) for years.

This brings me to a crucial point: be kind to your legacy systems. Instead of treating them as a burden, see them as a valuable reference point. They’ve survived because they worked, and understanding why they worked will help you design the next generation of systems.

3. Balance Innovation with Stability

This is where things get interesting. On the one hand, fintechs are pushing the boundaries, bringing innovation, customer-centricity, and hyper-personalisation to the fore. On the other hand, traditional vendors offer the depth of experience, reliability, and regulatory compliance that only comes with decades of industry knowledge.

The key is finding the sweet spot. You don’t have to choose between innovation and stability—you can (and should) have both. The trick is to leverage the strengths of each player, whether that’s partnering with fintechs for flexibility and speed or working with established vendors for robustness and compliance. It’s not an either/or situation; it’s about blending the best of both worlds.

4. Don't Forget the People

Core banking transformations aren’t just about technology. At the end of the day, the systems you build will be used by real people—your employees and your customers. Keeping them in mind throughout the process is crucial. After all, technology should empower people, not complicate their lives.

A successful transformation means involving the right people from the start: the front-line staff who know what customers need, the IT team who understands the nuts and bolts, and the leadership who sets the vision. Bring them all together, and you’ll have a better shot at success.

5. Evolution, Not Revolution

Let’s face it: transforming core banking isn’t going to happen overnight. And it shouldn’t. Banks that have been around for a while know that these systems are complex for a reason—they support vast operations and must meet stringent security and compliance requirements.

So, don’t rush the process. Evolution is often more sustainable (and less painful) than revolution. Take the time to map out where you are today, where you want to go, and how you’ll get there. And remember, incremental change is still progress.

6. Be Ready for the Unexpected

One thing I’ve learned is that even the best-laid plans can go sideways. Whether it’s a regulatory shift, a technology hiccup, or an unexpected market change, something will come up that you didn’t see coming. But here’s the thing: that’s okay. Resilience is as important as innovation in any transformation project.

Expect the unexpected, and build flexibility into your plans. This way, when something does come up, you’ll be ready to pivot and keep things moving forward.

Final Thoughts

Transforming a core banking system is no small feat. It’s a long, winding road with plenty of challenges and opportunities along the way. But here’s the good news: you don’t have to do it alone. There are plenty of lessons to learn from those who’ve been down this road before—and plenty of people, like me, a global tribe who are happy to share what we’ve learned.

So, if you’re thinking about embarking on your own core banking transformation, remember these lessons: keep the core strong, balance innovation with stability, involve your people, and be prepared for the unexpected. And above all, take your time. After all, good things come to those who evolve.

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