Designing Nextgen Core Banking Platforms

The great competition in the banking sector is always at the top level and competition is good for consumers. Every bank seeks to increase its market value by crossing the limitation of its services and offering new age capabilities. In this context, the influx of Neo banks has inspired the banking sector to a larger extent. 

They wish to utilize the next-generation digital core banking platform to greatly enhance the experience their customers expect with optimized digital banking services. Traditional banks, which are based on the legacy core banking platform, are often struggling to keep up but they can weather this due to their deep pockets. 

Another reason is that they are stuck in many limitations due to the rigid infrastructure of their existing core banking platform. The lack of flexibility makes it challenging to deliver customized services to suit the changing nature of their customers’ expectations.

The next-generation core banking platform allows banks to leverage new technologies to create new revenue streams. The tremendous growth in digitalization and adoption of digital banking in recent years has helped financial institutions to learn more about current and potential customers based on customer data analysis.

Let us discuss in detail about designing NextGen Core Banking Platforms.

What is a NextGen Core Banking Platform?

The NextGen Core Banking Platform is designed with an aim to remove the obstacles limiting financial institutions in their digital banking journey. It offers a specialized financial processing platform based on a modern, flexible, scalable, and open framework.

The relentless competition and cost pressures, coupled with the major financial crises such as the one in 2008, have forced financial institutions to adopt innovative ways to provide better banking services to their customers. The new system puts so much focus on smooth banking experience for their customers across payments, analytics, security etc.

Key Features of NextGen Core Banking Platform

The NextGen Core Banking Platform provides financial institutions with a host of efficient features that make their banking processes smooth and automated. The salient features of the core banking platform are as follows,

1. Real-time check system

   Timesaving is a great aspect when it comes to the processing of bank checks, and NextGen Core Banking Platform aims to offer the solution by providing a real-time check process. The core banking system creates a digital picture of the check with a MICR band and forwards this picture to another bank for processing. This system removes the necessity for manual intervention and extra physical documents.

2. Data analytics

   Data analytics is an advanced technology used to collect, process, and analyze both organized and unorganized data. NextGen Core Banking Platform is also equipped with analytics that allows institutions to detect new market trends. By detecting trends, institutions can make rapid progress in further optimizing their existing revenue channels or creating new revenue channels.

3. Loan processing

   NextGen Core Banking Platform offers automated loan processing based on new cloud and web technologies. This loan processing system is straightforward to set up. In addition, it assesses and identifies loan applications that may suit the bank's lending criteria.

4. Chatbot integration

   The NextGen Core Banking Platform allows the banks to offer superior customer service with 24*7 support so that the customers can get banking assistance anytime and anywhere. And for this purpose, chatbot integration has been included in banks to solve any problem of customers even after banking hours. Chatbots can be utilized for basic tasks such as Account Balance, Credit Card Statements, Pin Generation etc. This can, also, be extended to Intelligent / Conversational Chatbots with elements of Natural Language Processing and Natural Language Generation thereby infusing AI into the offering.

5. Customer relationship

   Customer relationship management is critical for the financial institutions that enable them to manage the existing relationship with various customers and prevent them from any churn. In doing so, they are also able to detect potential customers. It can trace the current banking customers and use them to target new people with lesser COA (Cost of Acquisition).

6. Digital banking

   These days, mobile banking or internet banking is widely used to deal with many banking transactions. It is necessary for banks to build a secure system keeping in mind the potential liabilities that may arise due to a data breach. In this context, NextGen Core Banking Platform can enable banks to build a more secure structure so that customers can rely on the internet banking system with less fear.

Advantages of Nextgen Core Banking Platform

• The NextGen platform gives traditional banks an advantage over emerging competitors.

• Traditional banks have unlimited size to maintain deep capabilities involving mainframe and legacy systems. Innovative banks are equipping their mainframes with state-of-the-art analytical tools.

• NextGen core banking systems are the touchpoint for every customer interaction, and therefore, additional mainframe capabilities enable a thorough predictive analysis of all transactions on legal service agreements.

• Innovative banks regularly push sensitive data to the data warehouse for analysis.

• Faster time to market using the Platform's.

• Provide a faster setup of the ecosystem.

• Pay As You Go model enables organizations to adopt the new platform without worrying about exorbitant charges.

Nextgen Core Banking Platform Supports the following,

• Cloud-native technologies
• Standards-based open API facilitating integration
• Powerful standardization

How useful can the NextGen Core Banking Platform be in Generating New Revenue?

The next-generation core banking platform is built with the intention of providing superior customer service with innovative customer-oriented strategies. It has been designed to strike a balance between the rapidly evolving customer and market dynamics in this digital era. Three major factors are focused on building Nextgen core banking platform,

• Cost Effectiveness
• High-speed transaction system
• Future-readiness by way of updates

The key features of the NextGen core banking platform required to drive new products or services to generate new revenue streams are described below:

1. Scalability

   The components of a core banking solution need to be modular so that it enables a bank to scale each component individually, rather than an expensive monolithic approach. A microservice's architecture promotes the flexibility of a core banking solution because any downtime in one of the microservices does not affect the other microservices while the former recovers.

2. Flexibility

   To stand out in a competitive US banking market, speed and agility are a must in a bank. Agility mindset translates into a technology platform with little or no code for core banking systems that provides wide range of options, easy to understand workflows for faster setup and dynamic product infrastructure. It enables business owners to create customized banking products to reach their goals.

3. Interoperability

   A core banking solution is vital for a bank that can integrate with its existing legacy systems and, at the same time, with sophisticated third-party systems through dynamic APIs. Moreover, it can combine in-house and best-of-breed third-party fintech capabilities to provide a superior user experience to its target customer segment.

4. Compliance

   The US banking industry has a complex regulatory framework that incorporates multiple checks and balances across multiple layers and often involve federal regulatory agencies. The Dodd-Frank Act (An Act to promote the financial stability of the United States by improving accountability and transparency in the financial system) and BASEL norms have made reporting and compliance process extremely complex and tedious. Additionally, banks find it difficult to manage reporting requirements and security standards with legacy core banking systems. NextGen Core Banking Platform is compliant with national and international standards and it significantly improves the compliance process and reporting in US banks.

Top Core Banking Software

• Finastra
• finance
• Temenos
• Mambu
• Finacle
• Oracle FLEXCUBE

Conclusion

The innovation of the NextGen Core Banking Platform is considered the backbone of every financial institution. Their integration into the modern business technology infrastructure has brought remarkable changes in the past few years. The changing landscape of FinTech collaboration has incredibly inspired them. NextGen cloud-based core banking systems are gaining a lot of value and response in the modern digital era. They have a high potential to be an alternative to the traditional core banking system.

Banks, into action, must now recalibrate their time-tested strategies for the new normal and design them around individual client needs to make themselves best positioned to win. The digital native customer deserves a modern banking experience. How can your organization get there? Q’s team of engineers’ bring leading digital, design and engineering capabilities that help banks in fast tracking, scaling and creating innovative experiences that drive value for your internal and external shareholders. Reach out to our team with questions -> info@qentelli.com.