Flexibility and Agility are the future of Core Banking

Core banking is putting a cap on banking potential. The way I see it, the legacy core systems we rely on as an industry are holding us back from true innovation. Or, more precisely, our use of those core systems.

It doesn’t have to be that way, though. I can see a future of banking that looks very different. A future that not only opens the door to raised revenues and reduced costs, but allows IT more scope for delivering innovation.

Currently, we use core systems as something of a crutch. They provide us the framework on which banks operate, and everything we do goes through them. It’s perfectly understandable that banks are wary of upsetting the apple cart and causing damage to their systems.

But while they are robust, they lack agility. And more and more, people want speed and agility. They want everything yesterday. And we’re just not equipped to deliver that kind of speed.

Banking IT can deliver that speed and agility, though. It can deliver innovation. And it can do it today, not 10 years from now.

In fact, I don’t see a vision of the distant future, where AI has taken over and banks are scientific wonders. I see a vision of banking that can happen tomorrow. If only we put in place a few changes to our architecture. If only we build for innovation rather than through fear of failure.

The thing is, ripping out core systems and replacing them isn’t just a lengthy and expensive process, it’s both risky and overkill.

Cores were not intended to work this way. They were intended to provide a robust core to banking IT, but instead of building a smart and agile system around them, we’ve added pieces of custom code here and pieces of custom code there, and eventually we’ve turned a shiny core into a mess of disjointed code.

In my opinion, we should strip back all of these custom developments and replace them with streamlined microservices designed to solve individual problems.

Yes, the idea of microservices is not revolutionary, but I feel like the implementation has not fully realized the IT potential.

Take pricing, for example. If a pricing microservice could talk directly with multiple cores (current accounts, loans, cards, etc.) directly, take on board any data, no matter the language model used, and then formulate pricing rules based upon that data, it would be a game changer.

Any changes to packages or bundles could be taken care of by banking staff in a matter of hours, rather than the months of custom development to get new packages created now.

Technically, I’m not sure it’s that great of a leap, either. We simply need the will to put innovation first, and to look for real opportunity instead of hiding behind core renewal projects that will never truly be completed.

The next step on our journey toward a more efficient, flexible, and agile banking IT landscape begins with microservices.

What do you think?