How To Modernize Core Banking Systems

Core banking systems are a bank’s back-end system designed to manage large volumes of transaction processing quickly and reliably. They were first developed in 1959 with the creation of the COBOL programming language. When evaluating core banking systems, financial institutions should ask several key questions. These can help them determine whether their current core banking technology needs to be replaced.

Customer Relationship Management (CRM)

Despite the hype about digital transformation, many banks are still reluctant to change their core banking systems. They’re worried about costs, disruption to customers, and technical migration issues. Core banking systems are a central element of a bank’s IT architecture. They process thousands (sometimes millions) of daily transactions and update accounts in real time. They also help minimize payment errors by keeping financial records in sync with other databases.

Traditionally, these systems required a complex and lengthy integration process between front-end applications and back-end systems. However, newer technologies such as microservices and API have made it easier to integrate bank products and services.

Enterprise Resource Planning (ERP)

ERP software helps companies manage core business processes like accounting, procurement, human resources, customer relationship management, inventory and supply chain operations. This software solution helps organizations automate their daily tasks and streamlines processes to improve productivity.

In addition, an ERP solution can strengthen the relationship between the company and its partners by allowing for better communication of information between departments. It can also help track customer satisfaction, including survey responses, support tickets and returns, helping companies stay on top of their game. With that said, implementing and using an ERP solution requires a significant commitment. The tool should be deployed with a clear vision of its objectives in mind and a proper time horizon for deployment.

Business Intelligence (BI)

Business intelligence for banking is a powerful tool that provides valuable insights into customer data. It helps banks to make better decisions and boost their profits. However, it’s important to remember that BI implementation is a process and requires a robust framework and toolset. BI software uses data warehousing and big data analytics to compile and organize information. This helps to reveal hidden trends and patterns, such as credit histories or purchasing habits. Banking business intelligence tools can also help to optimize marketing campaigns and improve customer retention rates. This can be done by analyzing customer data and behavior to predict needs and anticipate their actions.


Payments operations are the core of every financial institution’s daily operations. Customers enter their information in branch locations or online and the system updates all transactions in real-time. Credit union tellers process deposits and cash withdrawals through the system, mortgage lenders calculate interest payments and postings to accounts and general ledger systems, and accounting staff balance bank statements. Ideally, a core banking platform offers tight integration across touchpoints and is easy to learn so frontline employees can execute routine tasks quickly. Many banks also prefer to choose a solution that allows them to customize their digital experience for their customer base. And they want the system to be secure and available from anywhere.


digital payments solution must handle high transaction volumes and function without interruption. Prolonged outages risk regulatory scrutiny, customer opprobrium, and significant losses. To assess the reliability of a core banking system, banks frequently ask questions about how many support tickets are logged and how long it takes to resolve them. Modern core systems have microservice architectures that decouple business capabilities like payment processing, card issuing and onboarding, compliance management etc. They can be deployed in multiple public cloud environments and stitched together as white-label solutions for fintechs or banks.

To avoid a costly, complex core banking system migration, financial institutions can deploy next-generation systems separate from their legacy stacks and migrate customers slowly over time. They should also look for a core provider that has extensive API catalogs to support third-party technology integrations.


Managing a bank’s account and general ledger information, core banking systems are the lifeblood of every financial institution. But they can become major barriers when bank executives look to modernize. Banks should consider starting with a cloud-native core for simpler service lines, and gradually moving more products to the new system over time. Flexibility with API integrations and open banking standards is another important consideration.

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