In response to these issues, a new breed of core banking systems has emerged in the last few years.
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These problems vary from bank to bank, but include a dwindling engineering talent pool, excessive undocumented customization leading to a complex code base that can be difficult and risky to change, and various vendor-support issues. In addition to the existential issues listed above, banks endure some tactical day-to-day pain points with legacy core banking systems. Older core banking systems- usually designed for reliability rather than open architecture-may need to respond to this new requirement, which, to their credit, many are doing with alacrity. Banks are now expected to process transactions in real time, be able to stitch together partnerships with fintech companies in a matter of weeks, release new features frequently, be able to scale (up and down) their infrastructure needs at will, and even execute on M&A quickly. However, with the advent of digital banking, cloud, and APIs, banks have seen a significant shift in the way banking products and partnerships are constructed. Failures are rare, with some banks going without an outage for months, if not years.
Legacy core banking systems have traditionally succeeded in terms of reliability. Core banking systems handle a high volume of transactions and are expected to function without interruption-prolonged outages can invite regulatory scrutiny, customer opprobrium, and significant loss of revenue. In this article we look at the forces that are raising the core banking profile, and at the alternatives available to banking leaders as they consider their technology roadmap.īanks all over the world spend millions of dollars each on maintaining their core banking systems, which usually interface with tens or hundreds of systems. This topic seems to have suddenly gained visibility in the US and the rest of the world Many small and midcap banks in the US and Latin America are known to be shopping around for new cores. There have been a few instances in the US of these partnerships as well. Some of the major global banks have announced partnerships with new cloud-based core banking systems providers.
May 4, 2020Core transaction processing engines for banks-or “core banking systems”-have been making news in the world of banking technology of late.
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