In the modern age, banking institutions have resorted to technology to manage their most critical processes, such as customer account management, transactions, risk management, and reporting. Most banks use Core Banking Systems as their primary platform for such operations. Others also go for in-house development of their own systems. However, in the face of advancing technology, both options suppress the application of fintech and Universal Banking, ultimately hindering banking institutions from harnessing the full power of Open Banking.
Since 2015, when fintech took the financial world by storm, a new management solution has made its way into the banking sector. This is the Core Banking Platform.
Skaleet SaaS Core Banking Platform allows institutions to provide flexible, tailored solutions to their customers. This is made possible by integrating management systems with other custom components. The choice of features is unlimited. API (Application Programming Interface) acts as gateways that allow software to communicate with other programs. A Core Banking Platform built with API layers can seamlessly coordinate and integrate extra custom components while connecting them to the Core Banking Platform accounts.
A Core Banking Platform is the next-generation alternative to the Core Banking System, providing agility, time-saving, and infinite room for flexible scalability and innovation as technology advances. This solution future-proofs your banking institution. However, before choosing a Core Banking Platform, the following have to be in mind:
Technological Considerations
- The consideration of utmost importance when choosing a Core Banking Platform is the availability of its technology and IT stability. It would be devastating to both the customer and the banking institution when a break in service occurs with the Core Banking Platform. One ought to find out the availability rates of different Core Banking Platforms.
- Core Banking Platforms allow institutions to provide flexible, tailored solutions to their customers. This is made possible by integrating management systems with other custom components. The choice of features is unlimited. API (Application Programming Interface) acts as gateways that allow software to communicate with other programs. A Core Banking Platform built with API layers can seamlessly coordinate and integrate extra custom components while connecting them to the Core Banking Platform accounts. To fully exploit the flexible technology of Core Banking Platforms and the apparent advantages of APIs, one must pay attention to the architectural API style of the Core Banking Platform of their choice.
- For complete utilization of a Core Banking Platform, one must consider its microservice architecture’s state. While previous generations of Core Banking Systems were built on a monolithic, single-block architecture, Core Banking Platforms favor architectures composed of multiple microservices. These are self-contained, independent pieces of code connected to create a complete application of different modules. This means that the Core Banking Platform will provide more manageability, scalability, and robustness. They also allow for the creating of new products by orchestrating the different flexible and self-contained microservices while guaranteeing their integrity.
- Security is a dire matter when selecting Core Banking Platforms, both for the customer’s peace of mind and full regulatory compliance. One must ensure their supplier has an aggressive Information Security Management System (ISMS) and follows the international ISO/IEC 27001 standards. Moreover, ensuring the provider has a comprehensive data recovery process will ensure that the banking institution’s data remains intact during a disaster. For card-issuing projects in your Core-Banking, ensure that the provider keeps their PCI-DSS certification up to date.
Functional Considerations
- When selecting a Core Banking Platform, institutions must identify that the Core Banking Platform provides integrated services such as biometric identification applications, Anti-Money Laundering and Counter-Terrorist Financing, Politically Exposed Person sanctions, and transaction risk scoring. Also, one has to check with the supplier about the feasibility and pricing of additional integrations. Evaluating existing integrations and partners from different Core Banking Platforms will help one identify the Core Banking Platform that will aid in the fast expansion of a range of products and services with little up-front costs.
- As mentioned above, one must ensure that the selected Core Banking Platform provides accounting services. Beware that some Core Banking Platforms do not offer a complete chart of accounts within their platform. If one integrates such a Core Banking Platform into their institution, they will have to hire an accountant who will be responsible for data entry (Bank fees, expenses, reconciling funds e.t.c) at the end of every day. This paves the way for human error. To avoid this, it is essential to focus on a Core Banking Platform that supports a complete chart of accounts.
- Core Banking Platforms do not always offer Internal and external notification systems. It is highly recommended to check with the Core Banking vendor that their platform uses an inbuilt internal and external notification system.
Contractual Considerations
- If one wants to switch their Core Banking Platform, they must first evaluate the ease of migration of a given Core Banking Platform’s supplier. Check with the supplier how an institution’s data can be exported, and in what formats the files will be in. Also, ensuring that the core Banking agreement license contains a clause in which the supplier commits to assist their client in exporting and migrating their relevant data will save a lot of time and cost in event that the client wants to migrate. Never enter into an agreement that would prevent data export or complicate a migration.
- Finally, while working on the contractual agreements, one has to pay attention to the terms and conditions offered by the Core Banking supplier. The supplier must comply with the data protection legislation provided by the government and relevant authorities. One should also be keen on the parties’ responsibilities, the power granted to the supplier regarding data processing, and the purpose of processing the institution’s data.
A Core Banking Platform is a powerful tool in the current and future world of banking. These technologies are flexible in responding to the evolving challenges that come with the advancement of technology. These platforms also play a significant role in seamlessly adapting to the ever-expanding fintech. Whether it’s a Universal Bank, Credit institution, or any other fintech, it is dire to tread carefully when choosing a Core Banking Platform. Taking time to evaluate the technological, functional, regulatory, and contractual aspects of a Core Banking Platform will play a vital role in the success of the institution.