Core banking transformation refers to the replacement, upgrade, or outsourcing of a bank’s core banking systems which are an integrated suite of software applications for processing and posting of transactions and managing the accounting processes of settlement. These applications perform mission-critical operations for a bank related to accounts, loans, payments, and securities, and constitute the heart and backbone of the bank’s information technology infrastructure.

The first core banking systems appeared in the 1970s and were mainly developed in-house and ran on mainframes. Package-based solutions started to appear in the 1980s but were limited in their ability to handle large volumes. In the 1990s, new players entered into this space with package offerings that were more open, flexible, and customer-centric. The core banking solutions developed in the last decade have focused on convergence of digital channels along with increase in scalability and flexibility. These solutions focus on enhancing the mobility for the customer and internal bank staff, and on achieving real-time channel processing and multi-channel integration capabilities.

This paper explores how core banking solutions of the future must be truly global so a bank can easily deploy a system across multiple geographies. New core banking solutions will be more scalable, adaptable, and process-centric than before and will be lean and fast to be economical to deploy over the cloud and enhance the banks’ agility in responding to competition and changing business requirements.