Core banking platforms handle a financial institution’s daily operations, including transaction processing, chequing accounts, savings and term deposits, loans, credit facilities management, and accounting. They also provide add-on financial products. Traditional core systems bundle customer recordkeeping, consumer and commercial deposit account servicing, loan and deposit account management, a general ledger and integration with third-party vendors. New technologies are bringing the modern core closer to front-end experiences.
Real-Time Processing Of Transactions
As banks look to modernize their core banking system, they are facing a variety of challenges. For one, existing systems interface with tens of other systems and are expected to function without interruption–long outages can lead to regulatory scrutiny, customer opprobrium, and loss of revenue. New core banking systems are designed to be scalable and flexible, and they provide a range of services that allow banks to offer their customers the best possible experience. However, replacing a traditional system can be costly and complex, especially since it requires extensive integration with other applications.
To help alleviate these issues, some vendors have developed next-generation core banking software that integrates well with other systems, offering flexibility and a faster rate of feature releases. These solutions are also likely to adopt a microservice architecture, which allows for better data management and easier development. These features are particularly important as banks seek to compete with fintechs. In addition, the right strategic partners and business models can make a big difference in the success of core banking projects.
The core banking platform is the back-end system that maintains customer accounts, records daily bank transactions and calculates interest rates. It is a vital tool that most employees at financial institutions rely on in some way, from new account clerks entering data to tellers processing checks, and accounting staff updating the general ledger. It is typically written in COBOL, a programming language that was created in 1959. Modern core banking solutions are built on microservices architecture, making them more flexible and scalable. They can also be upgraded and expanded without requiring major code migration. This reduces costs and makes it easier to launch new products and services.
When choosing a core banking solution, many banks consider the platform’s ability to connect with other internal systems and external services. They look for a cohesive design that allows them to change settings, add currencies and fees and create custom reports easily. Bankers also expect a responsive support team that provides reliable assistance.
Core banking systems are powerful and scalable, but they can also be flexible. Flexibility helps financial institutions adapt to changing markets and customer needs. The more flexibility a core banking system incorporates, the faster and easier it is to respond to customer demands. Larger banks have a monolithic core banking infrastructure that was designed to accommodate every possible product and service a bank could ever want. Although this is a very efficient model, it lacks flexibility. Adding new products or services requires integration with existing systems, which is both time-consuming and expensive.
Many core banking solutions offer out-of-the-box, white-label applications for end-users, such as Web bank and mobile banking apps. These are centralized, which adds to their security and enables real-time processing of transactions. However, many of these add-ons aren’t fully functional and require significant customization. In contrast, Skaleet’s core banking platform is agile and provides a low-code development environment. Its microservices architecture accelerates Time-to-Market, allowing financial institutions to develop and deploy ecosystems independently.
A reliable digital lending solutions provides security measures to protect customer data. These include a robust infrastructure, specialized encryption standards, and role-based access control. The system also uses monitoring solutions to identify and respond to potential threats promptly. It is important to maintain these security measures and regularly update technological protections.
A modular core banking system is more adaptable than a monolithic solution and allows for the development of new products and services without affecting existing functions. It also has a faster time to market than traditional systems, with the ability to create unique capabilities and deploy them in 3 to 4 months. A cloud-native core banking solution is a SaaS model that combines traditional and modern technology to deliver a flexible, scalable, and adaptable public cloud-based infrastructure. It also promotes financial innovation and supports third-party API integrations. This unique solution enables banks to meet regulatory and compliance requirements while maintaining their trusted legacy solutions.
Core banking platforms are the linchpin of a modern banking ecosystem, enabling financial institutions to offer efficient, integrated, and customer-centric services. As banking undergoes continuous digital transformation, these platforms play a pivotal role in adapting to evolving customer needs and regulatory requirements, ensuring the industry’s resilience and growth