We have a lot to be thankful for this Thanksgiving.
Strategically Speaking and everyone at Jack Henry & Associates wishes to thank our readers for years of support. It is our mission to bring readers informative and educational topics to help expand their knowledge on subjects within the industry.
We also wish to thank all of our authors for contributing such interesting and informative blog posts over the years. Their expertise have given us an insight into everything happening behind the fintech scenes - helping to break down complicated topics and provide useful tips for preforming at the highest level.
This week, Strategically Speaking will be taking a break to enjoy the Thanksgiving holiday. As there will be no new blog posts this week, here are several core-related posts from earlier this year that we believe deserve another read-through, including one from contributing author Trent Fleming (http://trentfleming.com/), Stacey Zengel, President of Jack Henry Banking, and Susan Griffin, Industry Analyst of Jack Henry's Strategic Initiatives Group.
Have a happy Thanksgiving and we'll see you all next week!
Tagging along with the FinTech wave of technology innovation, there are a handful of companies promoting “next generation” core systems. Generally, their sales pitch involves explaining why your current legacy core system is not right for the future, and encouraging you to change. There are at least two problems with this approach. First, your basic accounting needs have not changed. The requirements for bank data processing remain the same: accurate, timely posting and reporting of customer and bank information. The surviving core vendors have proven themselves over time to be reliable partners, have invested heavily in infrastructure and staffing to support their bank customers, and yes, continue to invest in research and development to bring out new products and services. Second, converting to a different system – any system – is far more complex than it used to be, and will have a tremendous impact on your employees and your customers. The customer impact in particular is troubling, because they are likely using systems ranging from mobile to Internet to bill pay that they’ve become comfortable with. Change will bring about apprehension, and may in fact adversely impact utilization. Utilization that you’ve worked hard to promote.
Here are four reasons you should consider “re-investing” in your current core system rather than converting to a “next generation” product. To be fair, I’m making the assumption that your current software is still supported and enhanced by your vendor. If that’s not the case, we need to have a separate conversation...
The hundreds of banks that I’ve spoken to this year all have one goal in common: to make banking simple for themselves and their customers. Long gone are the days when bankers sought to cut and paste all of the trendiest features into their offerings; the conceptual big data, PFM, artificial intelligence, and automated savings ideas have been narrowed down past the cool factor to those that truly improve banking. Bankers are addressing the user experience as more than graphics and flow, but as a way to change customers’ emotions about banking from a negative or neutral state to a positive one. It’s time to enjoy banking again!
To accomplish this, banks must gain more agility; they must adjust with rapidly changing consumer expectations and new levels of efficiency. Their technology must be fast, dependable, flexible, open and able to grow with change. And, despite the fintech propaganda, the core remains financial institutions’ central and most important component for these goals. Here's the secret: to make banking simple, the core should be literally transparent.
The core is the nucleus of an anytime, anywhere, constantly changing infrastructure. It is a dynamic starting point for data, real-time processing and lasting, memorable customer experiences. On the back-end, banks should be able to offer integrated channel strategies, streamlined workflows, real-time transaction processing and connect with their vendors of choice. On the front end, customers should experience a single interface that flows effortlessly between digital banking and personal interactions, a simple and enjoyable event...
Most of the banks in the U.S. market are utilizing core banking systems that were originally developed in the mid-to-late 1980’s. So it is no surprise to see a lot of mention in industry news and blogs these days regarding “core modernization” or “core transformation.” Another term that is probably more applicable is “core evolution.”
Core banking systems today are commonly being referred to as “legacy systems,” insinuating they are well past their prime and painted as irrelevant in today’s market. That’s not entirely true. In many regards, they have been transformed or modernized over time…they have evolved.
It is important to recognize exactly what a core banking system is and the purpose for which it serves. Referenced in Wikipedia, Gartner’s IT Glossary defines a core banking system as follows:
“A core banking system is the back-end data processing application for processing all transactions that have occurred during the day and posting updated data on account balances to the mainframe. Core systems typically include deposit account and CD account processing, loan and credit processing, interfaces to general ledger and reporting tools.” - http://www.gartner.com/it-glossary/core-banking-systems/
To further the point, core systems were originally developed as a bank accounting package. They were literally the “core” of a financial institution’s ledger system and customer information records. Principles of banking still apply and debits and credits still post to accounts rendering a new balance – which is the model that core systems were built to support. To that point, nothing has changed and core systems continue to meet those needs and do it quite well. What has changed is the way the transactions are processed and delivered to the core in today’s market...
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