linkedin Overcoming Challenges in the Core Banking Platform Transformation

How financial institutions can overcome challenges in core platform transformation

Author: Kaustubh Tare | Senior Vice President

HOW FINANCIAL INSTITUTIONS CAN OVERCOME CHALLENGES IN CORE PLATFORM TRANSFORMATION

When it comes to core banking platform transformation, banks have choices—go with a traditional enterprise core platform system,  opt for next-generation cloud-based core platform systems, or opt for next-generation SaaS platforms. While each option has its pros and cons like costs, flexibility, and speed to market, there are some key considerations that financial institutions need to take into account before making this decision. In this blog post, we’ll explore the challenges that modern banking systems face when making the switch to a new core platform and discuss how each type of system can help overcome those challenges.

The at-scale problem is one of the biggest challenges that FIs face when it comes to core platform transformation. A traditional enterprise core platform system can be expensive and difficult to scale, especially as the FIs grows in size. This can lead to frustration among customers who are often forced to wait long periods of time forgetting transaction status. Additionally, FIs can run into problems when it comes to adding new functionality. Many traditional core platform systems are not as agile as they need to be, making it difficult for banks to keep up with the ever-changing demands of their business and customers.

The product processor problem– As financial institutions grow their product offerings, they tend to shift to a product processor model. Product processors are best-in-class software platforms either vendor platforms or developed internally which cater to specific business products offered in the market. While this model aligns very well with the line of business needs, it increases the IT footprint in terms of hardware, tools, engineering teams, etc. Over a period of time, inefficiencies start creeping in in the form of duplication in reference, customer, market, product data, and providing a single enterprise view into things like 360-degree customer relationships, aggregated counterparty risks, enterprise-wide credit & market risk, compliance, regulatory reporting, etc.  It can also result in non-standardization in technologies used to deliver these product processors.  The change in the core product processor can become an extremely complex endeavor.

The integration problem is another challenge that banks face when transitioning to a new core platform. Core banking platform transformation often requires a massive overhaul of the bank’s IT infrastructure, which can be difficult and time-consuming to execute. In addition, FIs need to ensure that their new system is able to integrate seamlessly with all of their existing systems. Otherwise, they could face major disruptions in service and increased costs as a result of having to duplicate or replace those systems.

The cloud problem is the final challenge that FIs face when it comes to core platform transformation. Many traditional enterprise core platform systems are not built for the cloud and, as a result, can be difficult and expensive to move to the cloud. FIs need to make sure that their new system is designed for the cloud from the beginning if they want to take advantage of the cost and scalability benefits that the cloud has to offer.

While each of these challenges can be daunting, there are ways that each type of system can help overcome them. A traditional enterprise core platform system can provide the scale and functionality that FIs need as they grow in size. In addition, by working with a trusted partner, FIs can minimize the cost and complexity of the integration process. Next-generation cloud-based core platforms can offer all of the benefits of the cloud, including scalability and flexibility, while also being easy to deploy and manage.

Maintaining general preparedness for migration is key to a successful transition. This means ensuring that your organization has the right documentation, processes and infrastructure in place, as well as maintaining good communication with all stakeholders involved in the process. If you can experiment with new applications and technologies before the actual migration takes place, it will help ensure a smooth implementation on a wider scale. Finally, it’s important to have the right team in place to manage and execute a core platform transformation. By following these tips, you can ensure a successful migration to your new core platform.

Which option is right for your bank? That depends on your specific needs and goals. However, by understanding the challenges that banks face when it comes to core platform transformation, you can make a more informed decision about which system is right for you.

Looking to overcome the challenges of a core platform transformation? At Quinnox, we can help. Our team has extensive experience in banking platform transformations and can help you overcome complex challenges in core banking functions. Contact us today to find out more – marketing@quinnox.com.

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