Is Fintech ‘Innovation’ Diverting Attention Away From ‘Unglamorous’ Core Banking?

By Deborah Aubrook | 18 February 2015

Having been an avid reader of all things ‘core bank’ for the past year I’ve been struck by the general direction of the news away from the ever popular (but necessary) core bank legacy replacements, to the more ‘glamorous’ Fintech innovation subjects; ‘Seamless Omni-Channel’ came along in the Spring, gave way to Digital in the Summer, but that was hastily overtaken by Payments which continues into the Autumn and not forgetting Big Data that seems to be everywhere, all the time.

It would seem FinTech has become sexy (yes, really!) as the financial capitals of the world are vying for the top dog title in relation to the maximum number of accelerator, incubator & highly VC’d supposedly ‘innovative’ FinTech solutions created in their ‘hood. And this I find concerning because isn’t it the case that all of these glamorous activities have the potential of coming to nothing if there isn’t a strong foundation to underpin the operations of the financial institution – yes, we’re back to the decidedly unglamorous but essential subject of core banking platforms.

The need for core bank replacements has been a constant refrain for over 20 years but many banks held back due to a variety of reasons; cost, waiting for technology maturity or just downright fear of what lay beyond the signing of the vendor contract! But right now is the time to take the leap, right now is the time that core banking is actually becoming sexy! The technology, functionality and implementation methods have come of age and now a business case for transformation can and must be made because the survival of banks depends on it. Next generation core banking practices such as SOA, superior integration capabilities, modularity, BIAN etc., ensure that any legacy transformation project that includes these aspects will reap true rewards in the race for agility, cost control and therefore competitive advantage.

But don’t rush to sign on the dotted line for your new core bank just yet; there is another advancement in technology that needs to be taken into consideration before taking the leap, and that is SaaS delivery of your next generation core banking platform – SaaS gives all the benefits of SOA, modularity etc., and is a game changing prospect which must be evaluated from the perspective of massive reduction in capital and operational cost, increased agility and faster implementation. Financial institutions will gain a huge competitive advantage by being a first adopter of a SaaS core banking solution. This is where the battle for survival will be won – by those that have the derring-do to grab the opportunity before the crowd!

Gartner’s Hype Cycle places SaaS solutions in core banking as being only 18 months away from mass adoption. I don’t know about you but having had experience of core bank replacement projects, if you carry on down the usual legacy replacement route you may still be haggling over contract terms with your vendor in 18 months’ time! SaaS is quick, easy to implement and you pay only for what you use, not for idle and quickly out of date infrastructure or vendor inflated add-ons – look into it now and you could be up and running in months – and only 8 weeks for a ‘Greenfield’ Bank! 
 

By Deborah Aubrook, Marketing Manager, Ideal Invent Technologies PVT Ltd

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