To compete in the fast-evolving banking industry, banks need to combine technology, design, and customer experience.
As a bank, you face real challenges that go beyond meeting customer expectations and experiences. A current major challenges is to compete in the race of the rapidly developing banking industry. To do so, it is necessary to achieve a modern core banking transformation. And to adopt a modular core banking system that gives you multiple advantages. Therefore, it makes sense to move traditional systems to a cloud-basedarchitecture. But how do you ensure to go for the right vendor?
In this blog, we will walk you through relevant points to look at when choosing a core banking system vendor. We will help you find the right criteria for your cloud-based components. And even provide you with a list of questions to include in your RFI to ensure you have all you need to select the right partner for your IT landscape.
The Cloud Choice
It’s important to check if the solutions and platform offered by the vendors are:
cloud specific to a particular cloud e.g. AWS or Azure native, or
on premise with the ability to host in the cloud.
The first and second points refer to a Cloud-Native solution. These types of solutions can optimize the services offered by the cloud provider. Having as a result a more efficient setup of your overall architecture.
Cloud agnostic solutions can be implemented regardless of your cloud choice but tend to utilize fewer native managed services. This means that they need to implement the latest technological standards for all the services themselves. Big cloud providers like AWS, Google, and Microsoft invest billions in their cloud, having a wider innovation stack. So, if you choose a specific cloud to build your architecture, make sure it has a wide range of services in its ecosystem, so you can reap the benefits.
Lastly, make sure that if the system offered is still run on-premise you get the ability to host it in the cloud.
At Five Degrees we choose to develop our core banking system °neo on MS Azure Native. As we want to focus on aspects where we can add value. Whenever we can, we utilize MS Azure services. We select the services that meet the high standard required for banking and focus on our core banking capabilities
The Granularity of the System
Many traditional core banking systems are monoliths: they are one platform. They include everything you need. Regardless of which part you use the entire system is there. If you’re just starting to replace your core, this is what you’re replacing. Updating an on-premise monolith causes a lot of work, it takes a lot of time and money to maintain it with a slower time-to-market for new features. Although operationally it can be fast and very secure, it is less scalable.
On the other side, if you have a microservices-based architecture, you can execute quick updates independently. Leading to minimal downtime – if any – a lower cost of change and potentially a much higher time-to-market than with monolithic systems. But an overly granular approach can make it hard to maintain oversight. Look at how your organization is structured and think about what an MVP (minimal viable product) for your transition would look like. Be critical of the scale of the services offered by your vendor. Make sure it matches your plans.
Our core banking system °neo provides modules for product engines, configuration capabilities, and access for banking employees. Modules can be licensed individually. All modules are made up of microservices, allowing us to only deploy what you need. This means you don’t pay for infrastructure you don’t use.
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