Banks were dissatisfied with their outdated core banking solutions (CBS) way back – going as early as the 2000s. These systems have been revolutionary at that time, especially with how manual banking used to take so long to process and it’s expensive, too. CBS was the solution that centralized operations.
Nonetheless, it has slowly been going downhill since. There’s a need today to innovate for banks to stay competitive. With the solutions that have been discussed, the idea of a multi-core banking solution took shape.
Unlike traditional CBS, which relies on a single system for all banking functions, multi-core systems, as the name implies, spread these tasks across multiple cores. This new approach could potentially offer new benefits for scalability and future-proofing businesses.
So, can multi-core banking solutions solve the problems banks are facing? Here’s a closer look.
Understanding Core Banking Solutions
Quite literally, what’s considered the heart of modern banking operations is a Core Banking Solution. CORE is even an acronym that stands for “Centralized Online Real-Time Exchange.”
This is a centralized system that allows customers and businesses to conduct their transactions not just at the branch where they opened their accounts but across the whole bank.
Think of the last time you withdrew from your bank’s ATM or paid using your bank account at any store. That’s all thanks to CBS. It’s one big network where operations work together from any branch, anywhere and anytime.
Behind the scenes, CBS also seamlessly integrates with bank accounting systems. This stores all important and sensitive account-related information, such as account numbers, balances, customer details, and loan terms, streamlining banks’ operations.
CBS saves banks time and resources that would otherwise have been spent on repetitive tasks. It’s a win-win for both customers and the banks themselves.
How a Single-Core CBS No Longer Works for Banks
CBS has done wonders for banking operations, but modern finance demands more than a single-core CBS can provide.
- Can’t meet demands: Customers are more discerning. Transaction volumes have increased since CBS was implemented, and traditional CBS often struggles to scale efficiently.
- Failed customer expectations: Not being able to deliver the convenience and customization that modern consumers need might lead to dissatisfaction and eventually lead to them looking for other options.
- Lack of flexibility: Single-core CBS is rigid and difficult to use for changing business needs and regulatory requirements. Banks need flexible systems that can easily accommodate new products and services.
- Integration problems: Digital innovation is on the rise, so banks need more updated systems that can connect with new technologies like artificial intelligence, blockchain, and cloud computing.
- Growing security concerns: Attackers have gone digital, too. A single-core CBS might not have robust security features to protect sensitive customer data and transactions.
To remain competitive, banks need to consider adopting more advanced and flexible banking solutions that can more effectively address these issues.
A Move Towards Innovation with Multiple-Core Banking Solutions
A multiple-core banking solution basically refers to using more than one core system within a bank to handle different operations. This, in turn, distributes the tasks across various specialized cores. Each of these cores is optimized for functions like retail or corporate banking, risk management, and many more.
Multi-CBS models are very beneficial for banks today because they can meet the high-performance demands of modern banking. Some testing has been done to stretch the limits of a core banking system, but this has only made it riskier because the core itself is unreliable.
Banks can just scale their operations much better with the newer model. They can add new cores or upgrade existing ones without any major disruption. This allows for seamless growth and adaptation to market changes.
Digital banks are leading the way in adopting multi-core systems. These banks take advantage of the flexibility and scalability of multi-CBS to provide superior customer experiences, which is why they are known as disruptors in the banking industry.
Thanks to technological advancements, especially the rise of Application Programming Interfaces (APIs) and the move towards a more microservices approach, integrating multiple systems has become easier.
As you can see, there’s some form of “decentralizing” going on with multi-CBS. Multiple vendors can now work seamlessly to create a cohesive banking system. This allows banks to pick and choose the best solutions from different providers.
By decentralizing the core functions, banks can better manage risks while still being able to improve their system performance and drive innovation.
In Conclusion
There’s certainly promise in choosing a financial institution that takes a more innovative approach to banking. A banking solution, like genome.eu, with multiple cores opens a path to solving the many problems faced by many banks.
Traditional banks struggle but can still evolve. For now, however, the new ones are leading the charge towards this much-welcome change.