As with any technology-forward sector, there can be much gossip in the financial services industry around the hottest topics in a given field. But whether the buzz is buzzworthy depends almost entirely upon a financial institution’s specific challenges and overall business objectives.

So, what do bankers want in their core banking platform? Read on to unpack findings from surveys, industry research reports, interviews and good old-fashioned conversations that CSI has observed in recent years.

Want a more in-depth look at the essential features of a core banking platform? Don’t miss our updated Definitive Guide to a Modern Core Banking Partnership.

What is a Core Banking Platform?

Before diving into bankers’ ideal core platform, it’s useful to set the stage and define that terminology in its modern sense. At the absolute minimum, core banking software tracks and processes every transaction inside a bank or credit union. It encompasses or enables most of the technology that bankers use for daily tasks, thereby supporting institutions’ overall businesses and strategic growth.

Technology providers can offer core technology as either separate pieces of software that enable specific functions or as platforms that offer a more holistic system spanning a bank more broadly. Many banks favor the bundled platform approach for convenience and to avoid disjointed, siloed operations.

With an open banking strategy, or the use of APIs to integrate third-party technologies, those capabilities extend further, enabling financial institutions to invest in and potentially offer a multitude of financial products available on the market. This is especially important when considering the ongoing challenge of gaining deposits against changing consumer attitudes and practices.

Although some financial institutions elect to work through the shortcomings of their legacy core technology, financial institutions switch core banking platforms for a variety of reasons. Though not exclusively, this typically occurs when their long-term contract ends so that the bank can avoid any unwanted termination fees.

Factors for switching technologies include cost, satisfaction with their existing technology suites or a cultural mismatch with their provider. But since a conversion often overhauls business processes and takes a considerate monetary and time investment, deciding on the right partner requires a great deal of consideration and discussion with key stakeholders at the bank. Below we explore what banks look for.

1. The Comprehensive Functionality Expected in a Core Platform

Bankers favor a core platform approach to technology primarily because it eliminates having to deal with multiple vendors and disjointed experiences. So, it’s hardly surprising that product suites and functionality top the list of essentials as bankers begin searching for a new core.

Core contracts can last for decades, so financial institutions must consider whether the vendor’s technology will successfully carry them into the future and grow alongside them. If it’s within their budget, many bankers consider the “logical choice” first and foremost as the provider that makes available the most solutions without requiring separate interfaces. However, the first step is to find the technology that helps them do their job (as it is today) well before moving on to the next big thing.

A core banking platform must therefore offer comprehensive functionalities to support various banking operations, including customer onboarding, account management, deposits, loans, payments and reporting. The essential checklist extends beyond basic data processing and revolves around significantly supporting customers and giving them 24/7 access to their money. This includes integrating digital banking solutions to rival big banks and digital experiences elsewhere.

2. Whether a Core Banking System Will Maximize Return on Investment

Banks evaluate the cost-effectiveness of a core banking platform by considering factors such as the initial implementation investment, ongoing support costs and potential customization or integration expenses. The best deals with new technologies often originate from the core vendor or their existing partners, as there are fewer implementation and integration steps.

Although customer demands can drive technological priorities, most investments ultimately seek to save money one way or another. For instance, responsive cloud-based architecture can eliminate some software and hardware expenditures. Built-in efficiencies like a streamlined onboarding can also bolster the bottom line by helping customers open accounts and spend money from them faster.

A vendor’s ability to help frontline staff perform their daily tasks more efficiently and with a stronger sense of purpose is often included in the discussion of the overall return on investment. Automation built into the core platform can help in that respect. For instance, unifying data across all systems eliminates dual data entry and old-fashioned methods of tracking and transferring data. Process automation can further maximize a bank’s return on investment by saving time and reducing errors in tasks like fraud detection and credit evaluation.

3. Core Banking Platform Customization and Ease of Use

Bankers look for banking functions to reliably fit together and interact cohesively. The core platform should be easily navigable with search functionality, easy-to-decipher data, readily available tutorials and reliable service representatives who assist with the platform as needed.

On the vendor side, a thoughtful adherence to UX design principles can go a long way. Bankers often praise platforms with an aesthetic appeal, a natural hierarchy, straightforward language and accessibility. Overall, they look for consistency throughout the platform to create a coherent, straightforward experience when serving customers or accessing their data.

How the core banking system is used often depends on the financial institution. Many prefer some ability to customize the platform and create a “favorites” list so that frontline staff can execute common daily tasks faster. And like a bank’s digital banking offering, ease of use also includes accessibility by computer, tablet and mobile device.

Many bankers also express a desire for their systems to be easily learned, helping to streamline training for employees and ensure a seamless transition. An easy-to-use testing environment ranks highly as another must-have for the institution to become comfortable using the platform to its full potential.

4. The Reliability and Stability of the Core Banking Solution

Given the stakes of employee demands and increasing competition, banks require a core banking platform that is demonstrably reliable and stable. It should be capable of handling high transaction volumes and processing requests accurately and efficiently while maintaining uninterrupted service availability.

If there are service interruptions, those support tickets should be resolved as promptly and effectively as possible. For that reason, many banks ask questions in the determination phase about how many support tickets a technology logs in a given week and how long it takes to resolve them.

As custodians of sensitive customer data, banks extend that stability requirement to include robust security measures as well. A solid platform should have stringent security measures, including data encryption, access controls, audit trails and compliance with regulatory standards. Banks also consider the security protocols, monitoring capabilities, backup and business continuity offered by core banking platform vendors.

5. The Quality and Accessibility of Bank Data and Analytics

47% of respondents to CSI’s 2023 Banking Priorities Executive Survey listed data and analytics as one of their top investments, a noteworthy proportion when considering the field of options. The primary goals involve unlocking performance management and illuminating additional opportunities to extend customer relationships.

Easy access to core data represents a massive advantage for a growing bank. Bank data and analytics offer insight into customer behaviors, performance indicators and regulatory reporting requirements. Accessing and querying core data should easily enable banks to identify opportunities for growth and relationship extension. As such, these banks look for robust reporting tools, account analysis and data-driven insight into customer profitability.

Valuable data use often depends on a banker’s role. For instance, managers and C-suite may get more out of high-level reporting, trending and dashboards so that they may determine investments. Marketing and sales likely benefit more from ad-hoc reporting that allows them to query customers with loans, no deposits, or customers with a demand deposit account (DDA) and no debit card so that they have better insight into cross-sales opportunities.

Customer relationship management (CRM) is one such data source that offers efficiencies, as it enables bankers to track behaviors and transactions across the system on the customer level. Many banks also look for insight into overall profitability and net interest margin, as well as narrow performance analysis of branches and officers.

6. The Core Platform’s Scalability and Flexibility

Regardless of whether financial institutions currently operate in “expansion mode,” most seek out a core platform that supports growth and can scale accordingly. This includes accommodating increased transaction volumes, additional branches and new products or services.

As a result, bankers often review a core provider’s track record of working with or growing alongside similar financial institutions. It can also be useful to understand the core banking platform’s short-term and long-term product roadmap to align institutional strategies and prioritize investments.

While there are similarities across the board, every bank also has unique business processes and customer needs. Extensive API catalogs and support for third-party technology integrations assist in that pursuit and enable institutions to stay adaptable, even if the core provider doesn’t have the exact solution the institution needs. The resulting agility ensures that banks can quickly respond to market demands, regulatory requirements and technological advancements.

7. Tight Integration of All Banking Systems

Banks rely on various systems and applications to support their operations. But they commonly mention products and departments needing better communication with each other as a challenge they hope a core banking system can address. Strong integration capabilities are, therefore, essential.

A cohesive core banking platform allows for easy data transfer that reduces expenses, opens accounts faster and enables the ability to launch new products more affordably. It also improves the overall user experience by making each component piece – even if it was added later or by a different vendor – fit into the technological puzzle without feeling tacked on or behaving like a disparate, siloed system.

The standard of integration relates closely to the user experience, as it can help eliminate redundant processes and offer a more seamless feel. Tight integration also encompasses parity across digital platforms. In other words, the bank’s digital experience on a phone should mirror that on a laptop or tablet. If the vendor makes integration easy, it also mitigates any headaches around implementation time.

8. Core Vendor Support and Expertise

Last but not least, the reputation, track record and service offered by the core banking platform vendor are vital considerations for banks. While system functionality is vital in vetting the provider, the decision often comes down to which vendor will make the best partner, both in innovation strategy and culture.

 

To understand whether the technology provider is a good fit, bankers often assess their industry reputations, the quality of interactions and how they answer questions. It’s also worthwhile for many to follow up with as many references as possible and ask other bankers’ opinions at networking events.

Bankers also emphasize the importance of reliable technological implementations. They expect products to be fully ready for use, avoiding delays and ensuring a successful rollout that meets the needs of their customer base. Ultimately, banks value a vendor that fulfills their requirements, supports their growth objectives and facilitates a positive and productive partnership.

Support is another crucial factor. Banks require reliable assistance and dedicated personnel who can address their concerns reliably and proactively. Although assessing support during the sales process can be challenging, there can be some indicators early on based on the quality of interactions and what other bankers say. It will become further evident during conversion and ongoing service.

Finding the Perfect Core Banking Platform

It’s been said that there is no perfect platform, just as there is no perfect vendor. The “best core platform” depends in part on the institution and how it balances all of the above, in addition to more specific needs and requirements.

But by carefully evaluating core banking technology, banks can empower themselves to thrive in the digital age while delivering exceptional customer service and creating a lasting partnership with their technology provider. What’s that modern core partnership look like in practice? Check out our definitive guide for a deep dive into the topic.

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