Digital Core Banking; a Farseeing Technology for Modern-day Banking

Digital Core Banking; a Farseeing Technology for Modern-day Banking

Kamaljot Singh

Content Head at N/A

Kamaljot has a rich experience of 4 years in writing different types of content. With in-depth knowledge, Kamaljot helps to add value to the lives of people through his writing. Once the writing was a passion for him but now it has become the life of him.

Views 747

Digital Core Banking; a Farseeing Technology for Modern-day Banking

25.03.2020 11:00 am

Digital core Banking is a trending term at the moment in the entire financial arena. However, most people are not totally aware of the term or the way it differs from the traditional core banking system.

What is core banking technology? It is the banking technology that can simply provide customers access to banking services, at any point, and at anytime. The purpose of the digital core banking system is to provide a perfect technology for modern-day banking.

It is evident that the traditional core banking systems don’t fulfil the all-out needs of contemporary financial institutions. In such a scenario, digital core banking is felt necessary to be a truly digital bank that can address customer needs. To define in the simplest way, digitization of the core banking to meet the transforming bank technology needs is all about the digital core banking system.

The following abstracts are going to provide an in-depth analysis of digital core banking. Also, it will be discussing its distinguishing features.  

Why go with digital core banking?

Traditionally known core banking has to go for transformations several times through several updates. This is basically done to meet the changing scenarios of business operations. It is also meant to function in concurrence with the evolving technology. However, such frequent updates make the system too complex ultimately. This turns things messy and challenging to manage.

Specifically, it makes things absolutely difficult to maintain interconnectivity among the systems well. Now, when interconnectivity is not flawless, various kinds of breaches are obvious. It certainly affects performance, and also brings various safety issues. Ultimately, it inhibits the growth of business significantly. All these aspects can be thoroughly addressed through effective digital core banking.       

Changing the scenario of data storage

The prime focus of digital core banking is about minimizing the traditional way of storing data. In traditionally known core banking, storage certainly has been a major headache. With digital core banking, the strategy is moreover about making the system engaging enough. Especially, the emphasis is given towards enhancing customer engagement. When customer interaction standard enhances, the business process is obvious to get faster. Naturally, the stress on customer support gets lesser.

Through the process, the core banking platforms enable the customers remaining in touch with the bank almost anytime. All these cumulatively help in enhancing the business functioning rate. Starting from customer support to transaction, everything remains thoroughly updated. More the things remain updated; less is the storage need. And, less is the storage need, more convenient a system becomes to operate with. 

How can it be helpful for modern day banking technically?

Digitisation is vital for the level of agility that the modern day banks need. Specifically, the banking scenario is expected to transform in following ways through core banking

Payment hub

It can provide a centralised payment mode linked with numerous transaction platforms to execute effective online payment process. In fact, banks have started coupling ERP solutions as well to enhance the process, and thus minimising the manual works.

API-led payments

Banks have managed to achieve swifter data access powered by API payment modes. It makes things incredibly customer-friendly and simpler as well.

Blockchain-based payments

Blockchain based payment modes are speculated to be the mainstream option in upcoming days for the banks. It limits the manual jobs greatly, enhancing things from security perspectives.

Apart from these, banks have started using advanced AI technology for greater automation, providing better security and data access. 

Key features making it the most distinguishing

Digital core banking is absolutely an evolved and visionary concept. It is the most effective way to adapt to technological transformation, without causing much disturbance with traditional mode. It is the perfect way to meet the swiftly transforming customer support scenarios.

Moreover, the high-end features of core banking software can cut short various unwanted functionalities.The system eventually becomes simpler and easier to be dealt with. Most importantly, it accompanies any kind of changes or upgrades quite well without disturbing the system on the whole. The system becomes much enhanced and devoid of risks.

One of the best parts of digital core banking is that it doesn’t disturb the regular functionality at all. Rather, it’s a solution for the banks and financial institutions to simplify things when the pressure is paramount. An organization genuinely feels the need for digital core banking when the pressure gets higher.

These are the occasions when restructuring the core system is felt essential. It is highly recommended to go with digital core banking principles on such occasions. This can ensure greater outcome and productivity at a lesser hassle. There are enough examples where digital core banking adaptation has delivered better outcomes.   

Deliver customized products

Digital core banking enables users to develop customized products. Banks thus manage to deliver tailor-made products for the clients/customers in a consistent fashion. Moreover, the customized products of such can be applicable to all modes of the bank’s functionality. It provides the bank managers greater flexibility in terms of services.

Enhancing the functional agility it hastens the productivity rate of the concerned bank. In fact, it enables the banks to prepare product models, adding features for it, and simplifying its utilization. Be it about greater level contracts or simple account opening, it can be useful for customizing all types of products. 

Assures greater security

One of the biggest advantages of core banking software is the greater security it provides for the banks. Moreover, it doesn’t compromise things in terms of control as well, under the pretext of safety. At the same time, it addresses all types of legal aspects as well regarding safety. High-end safety features make things accomplishing for third-party clients as well. Starting from authentication to identity handling, everything can be streamlined through the technology.

It offers various schemes for better functioning

Each types of core banking systems have their own advantage. Digital core banking provides various schemes through product development for its smooth adaptation. It enables the user to reuse the same product time and again. Basically, the upgraded digital core banking systems do come with interest schemes, those regarding expenses, transactions, fee distribution, and taxation. Through interest schemes, it defines the characteristics of various kinds of interest rates.

It defines various kinds of expense schemes through fee schemes related to certain kinds of transactions over the accounts. Similarly, transactions can be made simpler and hassle-free. Using a tax scheme, all kinds of taxes can be defined, starting from rates to the cumulative balance. Finally, underpayment allocation, it is possible to set the priority level for the charges applied to maintain transparency in the whole system.    

Smooth aligning with the external systems

The digital core banking system makes it possible for the banks to align with the external systems. This widens the scope of open banking scenario.

It is a misconception among many that digital banking and internet banking are the same things. They simply don’t understand the basic core banking system definition. Even at a very basic level, it differs greatly from the traditional banks in terms of the customer relationship. To define core banking,it makes things possible to access various facilities of the banks entirely over the web.

On the other hand, traditional banking, in many ways, is dependent upon the old fashioned hands-on transactions. However, powered by digital core banking, it is possible to access the entire thing through just one web address. At the same time enhancing convenience, it helps in maintaining greater customer relationships as well. To sum up, it helps the banking institutions in all dimensions of its operation.

Turning things cost-effective

It is evident that the overall expense can be greatly reduced through the adaptation of digital core banking. Specifically, it can significantly lower operational expenses. It’s the automation that enables the banks to achieve such feats. At the same time, one doesn’t need to set-up an expensive back-office arrangement for different operations. When the overall system is least complicated, chances of errors are obvious to get lowered as well. In fact, the entire banking procedures can be accomplished at a much lesser number of staff.    

No special training required for its application

Digital core banking is all about high-end automation. However, this automation is quite easy to get adapted with. One absolutely doesn’t need any special training for this or any kind of expenses to get used to with this core banking technology. Rather, it provides swift and smooth ways of processing, at the same time, adapting to changes easily.   

Latest blogs

Shuvo G. Roy Mphasis

Reboot 1.0: How financial services technology can enable the supply chain to support a post-lockdown boom

Ground control and Captain Tom When veteran Captain Tom Moore decided to walk one hundred laps of his garden before his 100th birthday to raise funds to support NHS heroes battling Covid-19 from the frontline, he never imagined that he would Read more »

Lisa Gutu Salt Edge

Building a PSD2 compliant channel: challenges and opportunities for financial institutions

PSD2 obliges ASPSPs including banks, e-wallets, prepaid cards and other companies that offer payment accounts to provide at least one channel for secure communication with third party providers (TPP). Even neobanks or e-money institutions, including Read more »

Thomas Pintelon Capilever

Credit origination - A lot of innovation on the horizon

While consumer credits are becoming more automated and user-friendly to request, all other credits are often still very manual and labor intensive to originate. In this (relatively long) blog I will try to give a description of the (potentially Read more »

Kelly Kearsley Hourly.io

Time Card Theft is a Big Problem. Here's How to Stop It.

Trust is at the core of every employer-employee relationship. You trust your people to do their jobs, and they trust you to compensate them for their work. Most of the time, it works. However, there's always the person looking to bend the rules or Read more »

Daria Afanasyeva UTP Merchant Services Ltd

Cybersecurity – Online payments are getting more secure

Ever since we've been able to buy anything we need with just a click of a button on our laptops or phones, online sales have been consistently increasing each year. Just last year, the total value of UK retail sales was £394 billion, with an average Read more »

Magazine
ALL
Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel