Banks are being hit full force by rapidly advancing digitalization and face numerous new challenges in this regard. Digitalization is upending the banking sector and presenting innumerable challenges to banks. Considerable changes in customer expectations, the emergence of disruptive competitors and the increased use of modern digital technologies are just a few of the key developments in the financial industry that are impacting long-term competitiveness.
Digital transformation initiatives require a strong foundation in the form of a future-proof core banking platform, which raises questions such as, how do legacy systems differ from modern alternatives? What needs to be considered when modernizing core banking platforms? How can banks design a future-proof system architecture? We get to the bottom of these strategic and technical questions in our whitepaper series.
In this first installment of our four-part whitepaper series on "Core Banking Platforms of the Future", we draw on our extensive experience in modernizing monolithic legacy core banking systems and empowering banks to implement strategic digitalization initiatives. This whitepaper provides a general overview of the latent dangers of continuing business operations with inefficient legacy systems, the major digitalization drivers in the banking sector and key characteristics of a future-proof core banking platform.
Modernizing core banking platforms allows banks to achieve notable operational improvements and cost savings. Digitally infused target architectures also provide greater scope for quick adjustments to rapidly changing customer behavior patterns, regulatory requirements and market developments. They also enable banking APIs, which dramatically simplify collaborations with innovative external technology partners. As a result, banks can accelerate the development of diverse digital ecosystems in line with the open banking principle.
In summary, we outline the challenges and risks of operating with legacy systems, future trends shaping the next decade of banking, and the benefits of moving to cloud-enabled core banking platform solutions.
An outdated monolithic core banking platform is inefficient and costly to maintain. It can also become a serious liability, leading to issues such as end-of-life risks due to lack of developer expertise, limited scalability and greater vulnerability to cyberattacks.
The banking industry of tomorrow – Banking 4.0 – is characterized by radical changes in four areas: customer behavior, the advent of digital technologies, emerging industry competition, and analytics and automation.
Future-proof core banking platforms are a sine qua non to compete in this dynamic environment. Such systems leverage the capabilities of the cloud, are characterized by optimized usability, facilitate the implementation of regulatory-compliant new business models and promote collaboration with fintechs.
We wish you an exciting read and are happy to support you in unleashing the full technological and economic potential of a modern core banking platform!