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Banks today face convergent disruption—an array of challenges, including tougher regulations, traditional and non-traditional competitors, and digitization.
To stay competitive in this emerging environment, and to continue to improve customer experiences and business outcomes, banks should continue to invest in and strengthen their core platforms or face steadily declining performance.
Whether they are contemplating ways to enhance their core platform or they decide on a complete transformation, bank executives need to ask themselves key questions about their core’s capabilities—and consider whether it’s scalable, flexible, dynamic and agile.
Given the challenges facing the industry today, banks have little choice but to strengthen their core platforms to outperform the competition—and to support optimization, agility and innovation.
Read more about Core Banking Industry Trends: American Banker Series.
Despite making substantial progress since the financial crisis, banks must still contend with tougher regulations, traditional and nontraditional competitors, and digitization. Accenture calls this array of challenges “convergent disruption.”
To compete in this environment banks need a next generation core platform capable of supporting three key operational building blocks for competitive advantage by 2020:
Optimization and Simplification: Having a structure as efficient and effective as possible
Agility: Being able to seize opportunities in times of change
Continuous Innovation: Having the ideas, vision and leadership to proactively stay ahead of the market
By identifying the key characteristics of these building blocks and understanding what a next generation core banking platform looks like in action, bank executives can better assess their own core banking environments and answer a critical question: “Is my bank’s core platform an enabler to achieving these three building blocks of competitive advantage, or is it an inhibitor?”
The answer to this question will dictate the pace and scope of the core transformation necessary—whether it’s full core replacement, remediation or evolutionary transformation.
Whether bank executives are contemplating how to improve their core, are in the midst of “enhancing” their core, or have recently completed a core project, it’s worth asking themselves several key questions:
Do our core capabilities support our “digital” ambitions?
Have we implemented a true end-to-end digitized process, to achieve a “zero back office”?
Is our platform scalable? Can it truly fulfill the promise of being multi-country, multi-tenant and multi-business?
Along with these familiar core capabilities are a set of emerging characteristics, which bank executives need to consider. Is the platform flexible, dynamic and agile? Does it provide the ability to:
Add new functionalities, such as personal financial management and other new offerings or services?
Personalize the customer experience for every customer, based on the customer needs and on the contextual information at any point of interaction?
Integrate third-party services, like nonfinancial offerings and personalized data feeds, and provide services to third-parties, such as credit reviews and payments engines, to create new value-added services to customers—without adding layers of complexity and cost?
Given the convergent disruption engulfing the industry, banks must strengthen their core platforms to make them more flexible, dynamic and agile.
Whether a bank views itself as a first mover or fast follower, to outperform the competition and not simply survive it needs a core with the right capabilities and characteristics to support optimization, agility and innovation.
February 13, 2014
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