Core Systems

12:36 PM
Chris Williams and Luis Martin Gonzalez, Accenture Core Banking Services
Chris Williams and Luis Martin Gonzalez, Accenture Core Banking Services
Commentary
50%
50%

Four Core Must-Haves To Enable Digital Banking

What does it take to become an "Everyday Bank" that is a customer’s trusted partner before, during and after a transaction?

The concept of "convenience" in banking is undergoing a shift away from branch locations and toward digital products that mesh with consumers' mobile-empowered lives. Accenture research suggests, however, that simply "being more digital" -- creating upgraded or mobile-friendly versions of existing products and services -- will not be enough to fend off new competitors.

In order to avoid disintermediation and generate value in the digital world, banks will need modernized core platforms to move beyond their traditional role as enablers of financial transactions and product providers.

They must become what we call an "Everyday Bank" -- playing a deeper role in the day-to-day commercial lives of their customers. That means offering them advice, access and the information they need to make decisions -- whether it's buying dinner, a mutual fund or a new car. The goal is to become a trusted partner before, during and after a transaction.

Luis Martin Gonzalez, Accenture Core Banking Services
Luis Martin Gonzalez, Accenture Core Banking Services

[Also from Accenture Core Banking Services' Chris Williams and Luis Martin Gonzalez: Does Your Core Platform Enable or Inhibit Superior Financial Performance?]

The stakes are high. Accenture estimates that competition from non-traditional playerscould erode as much as one-third of traditional retail bank revenues by 2020. The burning question facing banks today is whether their core platforms enable or inhibit their ability to become an Everyday Bank.

Institutions seeking to become an Everyday Bank must transform their cores into highly-efficient, high-transaction volume, just-in-time engines that power their operations. That, in turn, requires the core platform to be centered on four key capabilities:

Chris Williams, Accenture Core Banking Services
Chris Williams, Accenture Core Banking Services

Digitally Fit

    • Offer services with third-party providers to support customers' everyday needs and enable real-time processing across all operations.

 

  • Deliver the customer experience at the right price point through increased automation; enable scalability with low, variable cost-per-transaction.

 

Designed for Analytics

    • Position analytics at the heart of the bank across all application layers and decouple the data layer from business logic and processes.

 

  • Allow personalization on a real-time basis through predictive analytics.

 

Engineered for everyday actions

    • Evolve the customer database to hold new types of data (such as information found on social networks) used by analytic engines to create more personalized offerings and services.

 

  • Increase granularity levels to expose data and services across channels, using these reusable components to support more functionality, such as providing payment engines or account bookkeeping for third-party providers.

 

Adaptive to new paradigms

    • Manage and store third-party data to provide better customer services such as account aggregation.

 

  • Expand offering suite to monetize bank information and services.

 

 

  • Deploy multi-tenant platforms to enable seamless cross-border operations.

 

 

  • Use new technologies such as cloud or big data to transform cost structures.

 

Previous
1 of 2
Next
Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
Jonathan_Camhi
50%
50%
Jonathan_Camhi,
User Rank: Author
6/28/2014 | 4:27:18 PM
re: Four Core Must-Haves To Enable Digital Banking
Thank for your comment. I think you have a point in that it depends on how open the system is. But I'm thinking that that's an issue for a good number of banks, seeing how slow so many are in improving their digital capabilities and experiences. I've seen research suggesting that legacy core systems is a big reason for that. There are certainly other contributors like budgets and organizational silos. Do you think that they are as big an issue as legacy cores for many banks?
KBurger
50%
50%
KBurger,
User Rank: Strategist
6/27/2014 | 5:03:54 PM
re: Four Core Must-Haves To Enable Digital Banking
You make some good points, and I think this kind of analysis is why we haven't seen more core modernization projects in banking over the past 5-8 years. The argument for modernization/replacement today is, you need a platform that enables omnichannel (with those channels becoming increasingly digital), speed & responsiveness, customer insight & flexibility -- and also that can align with the massive data management/analytics demands facing banks, relating to compliance, product development, cross-selling, etc. And do it all efficiently and securely. That's a lot to ask of a system, and there are point solutions that can address these various imperatives. But maybe there comes a point where a bank simply has to "start fresh" and build on that completely modern and unified infrastructure and platform.
Guest
50%
50%
Guest,
User Rank: Apprentice
6/26/2014 | 12:59:50 AM
re: Four Core Must-Haves To Enable Digital Banking
I don't see a compelling argument for Core Banking replacement as a lever for digitization. The industry needs to be more customer-centric, so the

customer should be at the 'core'.

Core banking systems are about Customers (identity), Accounts and Transactions. Add a General Ledger and some Treasury components and you have your 'core'. As long as this system is open enough (from an integration perspective), it's a simple matter to add a sophisticated transaction management layer, service orchestration and integration capabilities. The existing capabilities of the core (such as the ability to process daily high volume account and transaction batches) can be effectively leveraged as part of a transformed enterprise.

Core banking replacements are expensive and time consuming, and disrupt the speed of all other innovation across the organization. Unless there are true 'legacy' factors, such as product end-of-life, infrastructure or resilience concerns, there may be no real need to replace (or even upgrade) the core.

Carefully assess the capabilities of your existing core - you may be able to save your digital transformation dollars for Workflow & Imaging, CRM, analytics and Omni-Channel enhancements.
Guest
50%
50%
Guest,
User Rank: Apprentice
6/26/2014 | 12:58:12 AM
re: Four Core Must-Haves To Enable Digital Banking
I don't see a compelling argument for Core Banking replacement as a lever
for digitization. The industry needs to be more customer-centric, so the
customer should be at the 'core'.

Core banking systems are about
Customers (identity), Accounts and Transactions. Add a General Ledger and some
Treasury components and you have your 'core'. As long as this system
is open enough (from an integration perspective), it's a simple matter to add a
sophisticated transaction management layer, service orchestration and
integration capabilities. The existing capabilities of the core (such as the
ability to process daily high volume account and transaction batches) can be
effectively leveraged as part of a transformed enterprise.

Core banking
replacements are expensive and time consuming, and disrupt the speed of all
other innovation across the organization. Unless there are true 'legacy'
factors, such as product end-of-life, infrastructure or resilience concerns,
there may be no real need to replace (or even upgrade) the core.

Carefully assess
the capabilities of your existing core - you may be able to save your digital
transformation dollars for Workflow & Imaging, CRM, Analytics and
Omni-Channel enhancements.
Register for Bank Systems & Technology Newsletters
White Papers
Current Issue
Slideshows
Video