Published on: August 8, 2022
In the past 50 years, we have witnessed changes in the capability of core banking systems. The evolution of modern systems delivered better functionality but still a rigid monolithic infrastructure, inhibiting banks from reducing their costs and accelerating their time to market.
The new fintech players driving the digital banking transformation have pushed incumbents to adopt emerging technologies in order to stay competitive. There is no doubt that SaaS platforms will dominate the future of banking.
Core banking systems developed in the 1960s and 1970s provided basic functionality for processing core banking transactions. They were mainly developed in-house and operated on mainframes with almost non-existent security. The systems introduced in the 1980s were primarily product-centric and developed in silos, with limited extensibility. The introduction of more open, flexible, and customer-centric core banking systems did not start until the 90s.
Single service core banking systems were more standartized and consistent. Despite that, they became outdated, expensive to maintain, inflexible, and unable to support growth and innovation. It was complex for banks to offer new products or integrate new applications, third-party packages, and other IT assets. The core banking nature of in-house or on-premise infrastructure could not provide necessary information for today's banking data control environment and customers' demands.
Today, core banking systems are genuinely global solutions. Their architecture's nature is open, scalable, adaptable, lean, and fast. Recent solutions focus on data management and real-time processing across multiple channels to enhance customer and user experience. The evolution of core banking solutions through a SaaS approach enables financial services to launch innovative and competitive new products quickly and cost-effectively. Overall, the next-gen core banking systems provide the needed agility and ability to adapt to regulatory changes and customer-centric needs.
There is no doubt that next-gen core banking systems will drive the evolution of banking. The emergence of fintech players stepping into banking is pushing traditional banks to adapt, in order to stay competitive in the digital finance transformation. The modern capabilities of cloud-native core banking solutions enhance financial services' agility in responding to competition and seizing new business opportunities. The promise of the cloud-based platforms is to empower banks to harness the significant advances in technology and design their business to the full delight of their customers.
Download the core banking evolution Infographic and learn what the next-gen core banking systems can bring to your business and keeping up with trends in the financial indrustry.
