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7 Warning Signs It’s Time for a Core Banking Conversion

Converting cores can be a grueling undertaking that requires months of planning and precise execution, and many banks lack clear strategies to determine when it’s time to make a core change. Unfortunately, many subscribe to the age-old expression, “Change happens when the pain of staying the same is greater than the pain of change.”

To gain an edge over the competition, banks should be open to upgrading their core to adapt to rapidly evolving technology expectations, as well as the bank’s growth requirements.

Knowing When It’s Time to Make a Core Banking Conversion

At its simplest, a core banking conversion becomes necessary when the current core no longer supports the bank’s strategic vision. Sometimes that’s because a bank’s strategy has changed—for instance, when you seek to expand your offerings or scale in a way your current core doesn’t support. Other times—particularly in recent years—the market has changed. For example, if your goal is to attract and retain customers, your core must enable a seamless digital experience.

Bankers often worry that hindrances during a core conversion could disrupt their institution. After all, a core banking system should be expected to function without interruption, since prolonged issues can invite regulatory scrutiny, customer dissatisfaction and significant loss of revenue. However, to gain an edge over the competition, banks should be open to upgrading their core to adapt to rapidly evolving technology expectations, as well as the bank’s growth requirements.

Below, we unpack seven warning signs it’s time for your bank to make a core change. For a more in-depth exploration of when and how to change cores as well as best practices for implementation and adoption, download our white paper.

1. You can’t seamlessly integrate new technology and products.

Banks need a flexible core that keeps pace with innovation and supports its unique business strategy to compete in today’s changing market. Your core provider should be the guiding light in helping you meet customer demands and achieve an IT infrastructure that supports your bank’s objectives. A core with component-based architecture and open API integration allows you to incorporate new technology without swapping systems. This eases the burden of responding to shifting customer demands, new regulations and other evolutions within the industry. Consider how the core system positions your bank to adapt and keep up in the future. If the system lacks the foundational technical platform, you’re already behind.

2. You can’t streamline internal operations with automated workflows.

As a competitive and growing financial institution, your bank needs a reliable, efficiency-driven core banking solution that is integrated, cloud-based and capable of automating backend processes so that you and your staff can focus on the business of banking.

3. Your current core doesn’t provide a 360° customer view.

Now, more than ever, achieving a complete 360-degree view of customers’ preferences, habits and needs is essential to gaining a holistic, customer-centric view of the banking relationship. This provides institutions with opportunities to create personalized banking experiences for all customers, such as delivering customized content around their specific financial activities and building campaigns targeted to their unique needs instead of a one-size-fits-all approach. Does your core system provide a centralized customer view?

4. Your core isn’t maximizing data analytics.

Thanks to digital channels, third-party applications and enhancements to core systems, institutions have access to more banking data than ever. Leveraging your customer and business data allows your bank to create an informed and profitable banking strategy. To easily convert your bank’s raw data into actionable reports that have the power to predict trends, mitigate risk and drive revenue, your core should feature banking analytics tools that harness this tremendous asset.

5. You can’t provide a seamless digital experience for your customers.

More consumers use digital channels to interact with their bank than ever before, with some never setting foot in a branch. Providing your customers with options to execute business that was once branch-based—including features like remote deposit, financial planning and management, fraud reporting or the ability to adjust card limits—creates a seamless user experience. It’s vital that your core allows you to create a user-friendly digital experience for your customers and incorporates a standard, well-integrated design across all channels to deliver consistent functionality.

6. You’re failing compliance audits.

Your bank’s core system should aid compliance with alerts and automation to help you respond to changing regulatory requirements without eroding efficiency. The best banking solutions are also those that regulatory auditors embrace because these tools give them the transparency they need to ensure institutions follow regulatory guidelines.

7. You don’t receive superior service from your provider.

When comparing your enterprise core solution, it’s essential not to forget the human element. One of the top drivers for seeking a new core solution isn’t rooted in technology; instead, it’s the level of service the bank receives from its current provider. A core solution is among the top-line items on your bank’s budget. Therefore, it’s more than a red flag if you don’t get the service and support level that expenditure warrants. For instance, when contact and resolution times wane, it’s time to find a new core banking partner.

Change is hard, but there’s much to gain from gazing beyond the short-term disruption to the long-term benefits

Determining whether you need a new core provider may be daunting, given the relative rarity of a core conversion and the stakes involved. Still, it is crucial to carry out this exercise dispassionately, with a business-risk mindset. Even if a bank believes there are no current problems, but there could be problems in the future, preparing for migration now may make sense. Change is hard, but there’s much to gain from gazing beyond the short-term disruption to the long-term benefits.

If you’d like to learn about CSI’s approach to banking technology and our enterprise banking solutions, download our interactive brochure.

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Jason Young serves as CSI’s senior director of enterprise banking.

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