Although every bank must seek the core solution that best fits its strategy and individual needs, there are some must-haves to compete in a digital-first world. While it’s essential for search committee members to identify whether specific applications are strategic necessities or nice-to-haves, it’s equally critical to stand back and evaluate any core banking solution on its broader characteristics. Our experts agree: evaluate the big picture first, then look at specific applications.

The following elements are all critical for competing in today’s financial landscape.

Key Elements of a Core Bank Processing System

1. Flexibility and Configurability

Effective institutions require an enterprise core solution they can tailor to their unique needs without time-consuming, expensive, difficult-to-manage customizations. The system should work “out of the box” but still allow system administrators to tweak the system as needed. Aim to maintain your institution’s unique workflows while upgrading to a new, more efficient environment.

Here are some questions to ask to ensure your core technology has ample flexibility:

• Can the solution be configured easily, or does that require a professional services team?
• Will you give us examples of how other banks have configured the solution or made it their own without engaging outside services?

2. API Integration & Open Banking

The core processor should enable an “open banking” approach, taking advantage of open application programming interfaces (APIs) to easily integrate solutions from the core provider and third-party fintechs. APIs can be used to securely share data between systems in real-time, ensuring customer data is up to date across your entire organization whenever customers interact with your bank. Open APIs can also facilitate platform banking, opening new potential revenue streams for banks.

Questions to ask around API banking integration include:

• Does the core system use open architecture via accessible APIs?
• What APIs, if any, have you built for use with the core system?
• How does the core system integrate with the software and systems we currently use?

3. Business Intelligence & CRM

A bank’s core is a vehicle for collecting customer data. Built-in business intelligence tools and customer relationship management (CRM) solutions ensure that customer data is collected and available across your entire organization. Having consistent access to a customer’s data is essential to providing a unified, personalized digital experience no matter where they engage with your bank.

To assess the data capabilities a core bank processor will offer, be sure to ask:

• Does the CRM offer the ability to add relationship data?
• Can you view the information by household as well as individual account holder?
• Can you easily push out customer data and targeted offers to your front-line staff?
• Can you easily segment your customers for focused marketing?
• Does the core solution provide the tools you need to create a customer-centric culture at your institution?
• Does the core system provide a centralized customer view?

4. Ease of Use

Your core solution should be simple to navigate, so your employees can work more efficiently and focus more on the customer. This is where having some front-line and back-office representation on the search team helps in the decision-making process. Let them determine if the core system is easy to navigate and whether it can reduce the steps needed in their daily tasks. Also, consider what tasks the core can automate and how that might improve workflow efficiency.

You can evaluate usability by asking:

• What makes the core system easy to use?
• How fast can new employees typically be trained on the core?
• Is the core system as intuitive from a system administrator perspective and, if so, why?

5. Modern Technology Platform

A more agile, open banking architecture supports a digital-first customer experience. Consider how the core system positions your bank to adapt and keep up in the future. If the system is lacking in the foundational technical platform, you’re already behind before you begin.

Have your IT expert ask:

• Can you view the whole banking relationship with a single login?
• How often do you implement platform upgrades?

6. Built-in Compliance Tools

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 the ones that regulatory auditors embrace because these tools give them the transparency they need to make sure institutions follow regulatory guidelines.

Ask questions like:

• How does your internal compliance team stay on top of new regulations in banking?
• What sort of support/education/webinars do you offer to prepare customers for upcoming changes?
• What kind of alerts or workflow enhancements are built into the system to ensure compliance?

7. Security

Cyberattacks are an increasingly common threat for all financial institutions, as high-profile breaches steal data and headlines more often each day. Hosted banking solutions should have an enterprise-wide security framework in place to protect the bank and its customers, not just safeguards around individual parts of the system.

Evaluate the core’s security with questions like:

• What are your security protocols?
• How do you monitor/guard against new types of attacks?
• What sort of backup and business continuity do you offer?
• How experienced is your security team and what are their credentials?

8. Open Cloud-Based Platform

A cloud-based core presents numerous benefits that better position your institution. Cloud-based systems are easier to scale as your bank grows. They are also generally more secure against cyberthreats than on-premises data centers. Finally, they are more flexible than traditional core banking systems, designed from the ground up with open banking APIs and other versatile tools in mind.

Consider asking the following:

• Does the cloud-based core meet our compliance requirements?
• How much support can we expect from the core provider?
• How does the specific public cloud align with our existing systems?

9. Remote Workforce Capability

Even before COVID-19, remote work was becoming more and more common. The pandemic has only accelerated this trend, and will likely leave the lasting impact of increased remote work. A core processor should facilitate that shift, eliminating technological barriers wherever possible and giving the bank the flexibility to respond to changing circumstances with minimal disruption.

Some questions to ask include:

• Is your core system designed to facilitate remote work for employees?
• What does the process for transitioning from on-site to remote work look like?

10. Exceptional Service

Don’t forget the human element when seeking out an enterprise core solution. After all, a core solution is among the top three line items on a bank’s budget, and you’ll be spending a long time with your core provider. So, if you don’t get the service and support level that expenditure warrants, it’s time to find a new core banking partner.

Important questions to ask include:

• Are you actively investing in this core system?
• What is your average contract length?
• How many tickets do you log each week, and how many are resolved the same day?
• How do you measure the quality of your customer service?
• How many customers does each account manager support, and how often would we expect to interact with them?

Find a Core Partner, Not a Provider

Your bank’s core system is the heart of your banking operations and dictates the success of everything from customer interactions to employee workflows. It should maximize your ability to compete in the evolving banking market and deliver a mix of innovative, flexible and secure technologies customized to your unique needs. But that success also requires a true technology partner, not just a provider.

To see a holistic, cloud-based core paired with a service-first mindset, refer to our interactive Enterprise Banking brochure.

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