All You Need to Know About Core Banking Transformation
Core banking transformation is the need of the hour. Many banks throughout the world have already gone through this transformation and many are on the verge of getting started.
Customer demands are constantly changing and to keep up with that, banks need to transform their existing processes and shift towards digital banking solutions.
Customer satisfaction has become the base of any business. Any organization that wants to differentiate itself from the competition needs to make customer satisfaction their top priority. Core banking transformation allows the banks to shift from a product centric point of view to a customer centric one.
What is Core Banking System?
CORE stands for Centralized Online Real-time Exchange. Core banking is an integrated banking system that enables the banks to offer superior banking services to the customers through location independent banking.
Core banking transformation can bring significant changes to the banking system in terms of improved efficiency, lower costs, and enhanced customer loyalty. With core banking solutions, banks can handle a large volume of customers with ease.
Why Core Banking Transformation is Needed?
In the earlier days, banking majorly meant just depositing and lending money to the customers. However, with the advancement of technology, banks are now powered up with core banking technology that is helping the banks to provide centralized banking services to customers.
Maintaining the legacy system was not only expensive, but also has the inherent risk of manual errors. Core banking systems are secure and robust in nature. They allow the banks to automate multiple stand-alone applications and optimize the cost of operation.
With core banking solutions, banks can now move towards smart revenue growth while offering location independent banking services to the customers.
Benefits of Core Banking Transformation
Core banking solutions are beneficial for both customers and banks. Let’s check out a few of the advantages that core banking offers.
Core banking transformation allows the banks to automate multiple business processes that otherwise would need some significant amount of human efforts. As many backend tasks are done through automation, the efficiency of the front-end staff increases and they can concentrate on more important tasks like customer satisfaction and delight.
Security is of the highest priority for banks. Any compromise on customer data or loss of information can incur a huge penalty on the banks. Not only that, this type of security breach can also damage their reputations significantly. Core banking solutions are highly secure in nature, which help safeguard customer data without worrying about any such compromise.
The adoption of core banking solutions reduces operational and support costs to a large extent. Banks use different channels like internet banking, mobile banking, ATM, and more to help them to reduce footfall in the branches. With location independent banking, customers can perform different banking activities from anywhere in the world. So, the cost of infrastructure and support can be significantly reduced.
Enhanced Customer Loyalty
Customers are happier than ever before as they don’t have to visit the bank branches for every transaction they perform. Not only that, but also banking operations like loan processing, opening new accounts and adding/removing services are also much easier now. This helps the banks to offer better services to customers while increasing customer satisfaction and loyalty significantly.
Challenges Faced in the Core Banking Transformation
Core banking transformation is a complex process and may take a significant amount of time to transform a traditional bank into a truly digital one. Let’s check out some of the common challenges that the banks may face in the process of core banking transformation.
Huge cost associated: Many a time the management team may feel a little hesitant as the core banking transformation has a huge implementation cost associated with it. The annual cost of maintenance and licensing fees are some other factors that add up to the cost.
Long time to implement: It may take a few years for the complete core banking implementation to take place. So, in some cases, it may be challenging for the top management to continue the investment for a long period of time.
Change in the culture: Any kind of change in the process is bound the transform the existing culture. And most of the banks are resistant to those changes. To be customer driven, banks need to be innovative in the way they provide services or solve the queries of their customers. This will essentially change the working culture that might have been prevalent for a long time.
Legacy banking systems can no longer support the rising customer demands. And, those who are embracing this change will remain profitable in the years to come.
Core banking transformation is the only choice for the banks to move towards growth and remain competitive in the market. With the new age core banking solutions, banks can now offer various new services to the customers to suit their changing needs.