What Is Core Banking?

Core banking is a centralized system that enables customers to perform operations from any branch within the bank's network. Mobile banking and internet banking have been made possible thanks to such a platform. Under this system, all operations are in real-time.

The term core is an acronym for Centralized Online Real-time Exchange in the banking world. This innovation is responsible for the ease with which modern banking is conducted. Since all branches operate from the same server, the customer ceases to become a branch's customer but a bank's customer. The customer has more control over their accounts from any location.

When a customer withdraws at a branch or ATM, the software sends the request to the central processing, where it is processed in seconds. The data center processes the request and authenticates it. Services such as withdrawal, loan interest calculation, and deposits are handled daily.

The Benefits of Core Banking

Though legacy banking systems were/are reliable(some banks still use them), they are expensive to maintain, and their integration with modern technologies is minimal. One of the main drawbacks of the old systems is speed. Customers expect operations in real-time, and banks often want to release new features. Unfortunately, neither is possible with the traditional core banking systems.

The following are some of the key benefits of the core banking solution.

1. Improved Security

The core banking system comes with advanced encryption to protect sensitive customer data. Bio verification and two-step authentication are enabled on the customer side to enhance security further.

2. Increase Customer Loyalty

With a core banking solution, an omnichannel banking experience is possible. Customers can access and manage their accounts from any location through mobile and online banking and interconnected branches. The transactions are easier and more transparent, creating a more enhanced customer experience.

As a result, banks maintain optimum customer loyalty levels making retention and attraction of new customers easy. Financial products and services being released by banks thanks to core banking solutions are customer-centric.

3. Access Throughout

Bank customers have expressed the desire for instant service like everything in modern life. Core banking solutions do not disappoint. Since the system is online, they can conduct business 24/7, enriching the customer experience. Contacting support can be done anytime, anywhere, thanks to this system.

4. Increased Productivity

Core banking solutions have improved the operational efficiencies of the banking sector compared to the traditional legacy systems. Though reliable, they lacked the fast data processing experienced under the next core banking system. Customers can expect to be quickly served regardless of location.

5. Reduce Operational Costs

Most operations such as ATMs, online and mobile banking, and payment gateways do not require manual processing, which lowers the operational cost. Visitors to the bank branches have significantly reduced, enabling banks to cut down on infrastructural and support expenses. The staff can also handle other more complex issues.

The traditional systems experienced errors due to multiple entries, and incomplete operations were common due to manual operations. But with the use of AI, the possibility of errors is significantly reduced while the number of complete operations goes up. A bank must do all it can to prevent errors for its reputation.

6. Multiple Currencies Support

The system supports transactions in multiple currencies. As a result, there is no need to change massive amounts of cash as was required in the past.

7. Easily Introduce New Products

Streamlining operations across all branches enables banks to introduce new products simultaneously. Core banking solutions improve efficiencies hence reducing the time to market for new products. Managing changes to existing products is also simpler.

8. Access to Improved Analytics

Most core banking solutions are equipped with applications for data analytics. For any business, gathering insights on customer behavior and trends is vital in making informed changes. The bank can use these insights to develop new products or update current ones. Some of the more advanced core banking solutions provide customized and real-time data.

9. Complying With Regulations

Generating reports to comply with regulations is simplified since all the information is easily accessible from a single source.

Core Banking Solutions

The banking software design sector has produced impressive applications to support customer demand for a more enhanced omnichannel digital experience. The following are some leaders in the space.

1. Mambu

The Berlin-based technology company experienced exceptional growth in the first two years since its inception in 2011. Over 100 microfinance institutions from across 26 countries adopted the cloud platform, rapidly cementing its position as a supplier of core banking solutions.

Currently, the Mambu platform serves over 65 million end-users from 200 plus customers, including banks, fintechs, and telecom companies. Its composable approach makes the solution customizable and hence scalable for your institution. In addition, Mambu provides tools that allow clients to build and launch any financial offerings or integrate them into their current system.

Their unique selling point is to deliver a great modern financial experience.

2. Jack Henry & Associates. Inc

Jack Henry and Jerry Hall formed this company way back in 1976 and, in their wisdom, decided to name it after only one of them. That aside, the company has one goal: to provide excellent financial services. They do this through their three main brands: Jack Henry Banking, Smyitar, and Profitstars. Under this brand is a massive 300 products and services geared towards financial institutions and businesses.

Jack Henry's banking products are meant to provide financial management assistance to the banking sector. Over 1000 small to mid-tier banks use these products to simplify their day-to-day activities.

3. Corelation Inc

The company started in 2009 and is based in San Diego, California. Corelation specializes in credit union core processing with a people-centric approach. Their core processor, Keystone, suits modern credit union needs. It features an intuitive display, open architecture, and various programming tools to help you customize the system to your needs.

Some of the operations supported include real-time ledger, accounts payable, transaction processing, loan origination, share and loan processing, CRM, member business servicing, and open API, among many others. Over 150 of the country's top credit unions trust and use Keystone to enhance their performance.

Keystone is designed to accommodate the smallest of credit unions to the largest. The design is also flexible to enable it to grow alongside your business. The database management provides scalability and reliability for all your operations.

4. Fiserv

Leslie Muma and George Dalton founded Fiserv through a merger between the first data processing and sunshine back in 1984. Through mergers, the company grew and was able to list on the NASDAQ within two years of its founding. Its headquarters are in Brookfield, Wisconsin. Currently, it is one of the leading IT companies serving over 13000 clients, including banks, financial institutions, and businesses around the world.

It is estimated that one in three banks in the US uses Fiserv. But it is not surprising with their impressive software suite. Some of their more popular applications include Cleartouch, DNA, Precision, and Signature operations. They are designed for banking operations such as core processing, risk management, data analytics, both mobile and online banking, and payments.

Fiserv applications can easily integrate into the existing banking system. Since they are scalable, they can support your institution at every growth stage.

Want to Stay Ahead of Financial Trends?

The only way to stay ahead of the competition is by adopting the emerging technologies before your competitors. Core banking solutions offer many benefits to your institution and customers. Due to the increased efficiency, your return on investment is higher, and customer satisfaction levels are high.

By partnering with Cotribute, you can ensure your institution stays ahead of the financial trend. We can help you provide a smooth customer experience, grow your customer acquisition, and cross-sell existing customers. Our software tools give you the competitive edge to compete with neobanks and fintechs.

Contact us today and schedule a demo to learn more about how Co.tribute can help digitize your operations.