The Modern Core Banking System: North American Mid-Large Bank Version, 2019

In the last 10 years, the rise of digital and the evolution of delivery channels have stressed platforms. While technology adaptations have allowed banks to stave off full-blown replacement, some institutions are reaching the breaking point, opting to transform. Transformation, however, continues to take many new forms. Ripping and replacing old cores is largely a thing of the past, and vendors are pushing for either progressive renovation or an emerging approach of vertical implementations, where a bank only transforms a specific vertical slice.

The divide between the old and new is increasing. Leaders are starting to build systems which give more power back to the institution. For example, they are giving them flexibility to integrate into third parties easily and at lower cost, shorter contracts with more inclusive economic models, and cloud-enabled microservices-based deployment capabilities for more configurable implementation. It’s no surprise that leaders are beginning to win deals at digital-only challengers and subsidiaries. Similarly, a new group of vendors building modern cloud-native platforms seeks to disrupt the market for core platforms across the globe. These offerings are attracting attention from small community/de novo to tier 1 mega institutions.

However, contrary to what some may think, there is no “best” platform. Each has its strengths and weaknesses, so decisions will be made based on resource availability, current technology environment, internal culture and capabilities, and existing core vendor products.