How banks can transform their core banking system and stay competitive.

New entrants like neo-banks (i.e. digital-only banks) are capturing significant market share across the globe as they use modern systems to attract customers. However, incumbent Financial Institutions (FIs) are inhibited by legacy systems utilization, causing them to play catch-up. A recent Everest Group’s survey of over 40 US and Canada traditional banks found that aging systems utilization put them at a disadvantage, as they are not able to launch new products, or, easily integrate with other platforms and not able to meet the dynamic needs of customers. 95% of these banks are not happy with their infrastructure. The difficulties they experience include: poor digital customer visitation rate due to the incapability to respond to their customers’ dynamic needs, and operation inefficiency due to the difficulties in multiple platform synchronization. As a result, 63% of the executives want an effective strategy that can enable them to remain competitive, drive profit and be at a vantage position to secure future market share.

Your institution might have a modernized front-office technology such as online and mobile banking, however in order to secure new opportunities and further meet customers’ needs, consideration should be given to the digital transformation of back-office capabilities, especially the core banking system (CBS). Additionally, automating back office procedures like core related procedures and other processes that runs alongside the core banking system would enhance operational efficiency. Other reasons for core system transformation include: compliance with new regulation, creating innovative financial services to keep pace with customer expectations, delivering more holistic financial products, monetization of internal data, increase privacy and the need to meet necessary security requirements.

There are different approaches to core transformation which depends on the need of each FI’s enterprise. These include:

  • Complete CBS Transformation.  Enable your enterprise to migrate or move to a new, modern, system and replace your legacy system.
  • Gradual Transformation: Here, some part of the legacy systems are retained and gradually phased out overtime, if the core system is still viable for years to come, thereby enabling you to build the enterprise around customer journeys.
  • Greenfield Approach. Allow your institution to easily transform into a neo-bank or digital bank, by leveraging virtual technologies to create convenient experiences to customers and enabling new customers to be on-boarded very swiftly.

For numerous banks, migrating to a preconfigured and packaged core banking platform seem to be a suitable approach to their enterprise transformation with minimum risk and affordable costs.  For these banks, the ability to replace their core systems with a modern packaged solution built on open architectures, creates opportunities to quickly benefit from a prebuilt digital infrastructure. The risks and costs normally associated with a complete transformation approach are minimized, while the benefits associated with a modern core banking system are captured almost immediately after the core transformation. Migrating to a new digital architecture where your enterprise will have access to an open, component-based platform that supports further innovation and transformation, is a wise choice for eliminating the inhibitions of legacy systems.

Transforming your Core system will instantaneously result in speed, allowing you to leverage the following opportunities: Enhance customer engagement via better products and services, faster time to market and deployment of new products and services, enhance agility and revenue growth, manage operational risk and costs and be part of a digital marketplace.

In most parts of the world and for many reasons, the complete replacement approach or upgrade of aging core systems have been the viable way to accelerate digital transformation, keep pace with competitors, and instantly gain efficiencies while managing costs and risks. But the target core platform must be built on modern open principles and be provided by technology providers with long-standing experience in financial services. Temenos, as demonstrated by its strong global presence in the core banking marketplace, is such a technology partner. Temenos banking software products, with modern functionalities and component-based open architecture, have been a viable core platform upon which many banks have based their transformation journeys.

JETHRO’s core banking transformation service is supported by Temenos, the industry leader in banking software, with over 3, 000 banking clients in over 150 countries. Temenos provides a Country Model Bank framework, which enables faster implementation at reduced cost. The transformation will maintain compliance with local regulations, while enabling banks to successfully realize their digital transformation initiatives.  Temenos banking software offers extensible, open and operational scalable, flexible and upgradable software products with a wide range of functionalities across the banking value chain. As a Temenos technical partner, we help our clients to identify the right solution, end-to-end business and technical architecture analysis, roadmap specification (that includes data migration, system integration and testing), implementation, training and support after go-live.

Whether full core replacement, progressive transformation or greenfield approach, JETHRO offers a client oriented end-to-end approach that helps your institution to undergo legacy transformation, resolve system issues and realize business outcomes in order to remain competitive. Contact us today!