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Saturday 8 May 2021
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What’s New with Core Banking?

What’s New with Core Banking?

Philip Ryan of Bank Innovation.com updated us on the last week’s FINOVATE Fall conference in NY.

He and many others opined and believe it may be time to rethink the core.

According to Ryan “Core transactional systems are commonly derided as being outdated and slow, yet they are rock-solid for what they do, such as maintaining an accurate record of how much money is in your account. Oh yeah, that.”

Ryan continued: “At Finovate last week, two vendors discussed plans for a do-over of core banking, but neither was discussing core replacement, an expensive and time-consuming operation that can eat up all available resources and muzzle a bank’s innovation efforts. Banno, now part of Jack Henry & Associates, launched a new platform to allow banks to launch mobile-first platforms, and BancVue, purveyors of the Kasasa brand, said it is building a new system of record to yield deeper insights.”

Last week at Finovate, Wade Arnold,  Founder of Banno a bank innovation company, outlined a new platform, called account-as-a-service, that could be used to build a mobile-first layer over an aging core system, or to launch an entirely new direct brand, much like BankMobile or Hello Bank. (Building a parallel bank is a frequently-cited, but seldom-practiced way to handle weakness at the core.)

The debate was continued to include information that small FIs have benefited from tech expertise, and and their apps and sites certainly don’t look like those of your typical small bank. The newly supported thought is what holds back banks is NOT technology– any bank or financial institution that embraces technology can reap benefits from high-quality mobile app and website, and fairly inexpensively and quickly, too. But the the key to get the most of the mobile world is that the culture, marketing and service of the bank need to support the mobile strategy.

Tech for the sake of tech alone may not be the answer, but it’s certainly a good place to start, and it’s refreshing to see it come from core vendors

The consensus at FINOVATE is that to compete, banks must go back to making the consumer first along with their demands to have access to the latest digital experience.  The Question came up many times: “What is Core?” Wade Arnold said “It’s a vertical future digital channel oriented to the consumer.”

WHAT’S IN A RELATIONSHIP?

There is a problem:  the core no longer knows enough about the customer to provide a functional relationship.  The relationship used to be at the bank level, and focus moved away from this when banks became less community orientated and more regional.

According to Ryan, “The consumer system of record is simply the enterprise-wide view of the customer, which allows the bank to relate to him effectively. Kasasa, a new checking rewards product offered by the Texas-based BancVue  is available through hundreds of community banks.  This Kasasa has more than 30 different customer touchpoints that it brings together in BancVue’s system, a feat that is impossible for the average core system.” With all these “touchpoints” that Kasasa offers it will help the banks move in the right direction with customers.

As banking evolves, more and more customers view their banking relationship as transactional, it would be much better for banks and customers if  they would consider it relational. A survey showed that business owners would rather meet the president of the bank that gave them a loan then the President of the United States.  According to BancVue “Customers want more guidance and more advice. Without that, the bank becoming a utility is a risk.”

There are new technology offerings to help banks capture more of a relational interaction with the core systems customer, but right now it is limited.  With this new digitally social interaction customers can view a dashboard that shows the spectrum of their relationship with the bank, and which can include relevant marketing messages and rewards. Even logging into the dashboard can trigger a reward — the Kasasa reward product is one such option to help banks capture their customer’s attention.

And with that the core will become even less of an excuse for banking innovation. Looking for the right partner to help you capture the relationship you desire from your customers is the moving into the right direction.  Finovate is one of the premier conferences to help FINTECH companies focus their efforts.

To see Ryan’s whole article:  Breaking the Ball & chain




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