Design Principles When Building A Next-Gen Core Banking System.
Published on: February 10, 2023
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By Edward van Koningsbruggen
When developing °neo, we faced many challenges and made firm design decisions that enabled us to build the best next-gen core banking system.
1. Having a clear design is vital.
When creating a cloud-based core banking platform or any platform from scratch, it is crucial to define the right design principles and stick to them. To build a true cloud-native core banking platform and not just a "deployed in the cloud ", we chose to work with to go for Microsoft Azure. This decision resulted in a daily design mantra called "Azure First".
We have always made choices based on Azure first, even since the early days when we started developing our SaaS solution. Those choices allowed us to leverage Azure's architecture.
For example, Microsoft Azure offers Azure Cognitive Search, an advanced search capability in the UI and API specs. Although our teams could build this functionality, we opted to take this Azure-managed service and integrate it into our platform to entirely commit our capacity and expertise to our core banking system functionality.
2. Having a single code base platform with a codeless configuration.
Delivering patches or version upgrades can be time-consuming and painful when running on an incumbent system. This is mainly due to extensive testing of customizations, fixing backward compatibility issues, and planning outages for big deployments. It also often requires significant resourcing from the software provider and the user throughout the release.
Our single code base with no-code configuration approach ensures all our platform users are always running on the latest version across all environments. This approach benefits them since they receive continuous upgrades of additional and improved software features. It also provides obvious efficiencies and eases the time to market.
3. Flexibility is key.
Flexibility means opening the platform to allow clients to use applications to maximize the customer experience. While simultaneously ensuring to only pay for the components they use.
Banks should be flexible to scale and incorporate software according to their needs. Another important design principle is allowing our clients to choose how to use our platform and embed it in their landscape.
For instance, as a bank, you can encounter different needs within your business to store clients' data or other operational functions. With our cloud-based core bankingplatform, depending on those requirements, you have the flexibility to integrate modules or features accordingly. Such as the payment gateway or a direct debit component.
The former means all the functional components work independently but can also integrate seamlessly as one platform. Strict decision-making led to such flexibility by having a straightforward design of how the platform components will own a specific feature, interact with others, and include orchestration between them.
4. Data belongs to the bank.
Data from a core banking system is arguably the most accurate insight into a bank's landscape. The transaction ledger is vital in the entire end-to-end bank landscape. It is the basis for the clients, regulators, general ledger, audit & risk, and beyond.
Our cloud-native platform provides all the data needed in whichever format suits the banks' needs. It can go from the daily balance of a client's loan to the entire transaction history of a cash account or the low-level audit trail for potential fraud analysis. This data can be accessed near real-time or scheduled in a reporting-friendly format by using reporting tooling directly. As an additional option, the data can also be unified and combined to the corporate data lake solution to provide a powerful aggregated overview.
With our core banking system, the bank owns the data gathered within our system; therefore, it can access it quickly, securely and seamlessly.
5. Focusing on build a skinny core ecosystem.
The final design principle is ‘focus.’ We aim to focus on °neo's core proposition and expand its functionality by building an ecosystem around it to deliver an end-to-end flow.
The whole landscape of a core banking system is enormous. Our SaaS platform offers retail & SME lending & accounts products. However, there are more services in a core banking ecosystem; origination and underwriting, KYC/CDD checks, AML transaction monitoring, websites, mobile apps, general ledger, etc.
Focusing on pivotal features and finding ecosystem partners to complement the core banking landscape is our vision and the only realistic approach. This means we aim to emphasize and allocate all our resources to what we excel in. Extending our offering by integrating different functionalities with best-in-breed partners opens a world of innovation and delivers the flexibility our clients need. Simply put,°neo provides the best in class cloud-based core banking solution.
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