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
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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?

Core As Enabler -- Not Inhibitor

Some financial services companies are already on the path to making their core platforms an enabler, rather than an inhibitor, of their Everyday Bank vision:

  • BBVA's transformation has enabled it to create new digital products such as Wizzo -- a new, efficient way of making peer-to-peer payments either online or by mobile wallet. The bank also acquired Simple, an online banking platform. BBVA has introduced new digital approaches into its traditional core business platform by establishing social media and online channels as key customer contact points and moving part of its architecture into a private cloud.
  • A large American financial institution is developing a new source of revenue by monetizing its vast pools of transaction data. It amasses customer data for small and mid-sized firms and applies sophisticated analytics to provide these firms with insights on their customers' demographics and their buying interests.
  • After significantly upgrading its core banking platform, Poland's mBank deployed new predictive analytic models, enabling it to introduce peer-to-peer payments, personal financial management tools, gamification and other personalized services that enhance customers' experience.
What will the path to digital core banking look like? Obtaining the digital core banking capabilities listed above will, in some cases, require redesign or replacement of existing core banking platforms. In other instances, the transformation may occur gradually.

Banks have several options for starting the journey; here are the most common:

  • Omni-channel platform: Providing consistent core banking capabilities across channels, orchestrated to deliver a superior customer experience
  • Data as the Core: Developing predictive models and real-time analytics that enable better storage and analysis of massive data to be used across reporting, commercial and operational layers
  • Customer Digital Ecosystem: Expanding the customer database to collect, analyze and use data about customer experiences, and share that data internally and externally
  • Digital Core Banking: Building new digital functions that enable core banking to be more granular so that it can reinforce service reusability; and to improve online real-time capabilities and provide greater automation
  • Digital Modernization to Cloud: Developing a just-in-time transactional factory to enable cloud modernization
Financial institutions won't become Everyday Banks with decades-old cores. Those that cling to the status quo risk being viewed more like utilities that conduct financial transactions. If you really want to deliver an enhanced experience to meet the daily needs of customers, the time to start the journey is now.

Chris Williams is Managing Director, Accenture Core Banking Services, North America Lead; Luis Martin Gonzalez is Managing Director, Accenture Core Banking Services.

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Jonathan_Camhi
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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
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KBurger,
User Rank: Author
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
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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
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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.
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