Core banking vendor lock-in is slowing banks down

Arpi Csipai

Core banking vendor lock-in is slowing banks down

In such extraordinary times as these, innovation, digital adoption and speed to market is needed more than ever. The SME segment has been the most effected by COVID-19. Drop in sales, cashflow and supply chain disruption are key concerns for small businesses affected by Coronavirus. Opinium, a UK market research agency, has found about 82% of SMEs in UK alone are concerned about the impact COVID-19 is having on their business. Another survey shows about 76% of UK’s SMEs have experienced a decline in sales, with almost 40% citing cash flow problems.

Making this segment the most in need for faster and smoother access to loans to support their business. European Union and governments are working hard to support the entrepreneurs and small & medium businesses with government backed COVID-19 lending support such as the UK’s Bounce Back Loan scheme. Despite all the good efforts, traditional banks are unable to provide quick loans to the SMEs who are in much need of funding immediately. This is clearly not the intention of these traditional banks, rather it is the hallmarks of vendor lock-in. Simply put, banks lack the flexible digital processes and technology to be able to change their products and services at the speed such times require them. These inflexibilities can mainly be attributed to high dependencies on internal monolithic systems, either built inhouse or supplied by traditional core banking vendors.

Core banking systems (CBS) underpin nearly every major banking process. Think of them as the information technology that runs a bank’s central nervous system—the software and infrastructure that links services to business units, customers, and back-office functions. These systems not only drive the banks’ day-to-day operations but also serve as the core IT platform for new capabilities and growth.

Yet many banks are saddled with underperforming systems and outdated monolithic architectures that barely support key processes, at a time when institutions face renewed pressure to reduce costs and adjust to volatile conditions in turbulent times like these. Traditional monoliths are designed in a way that every change in the process or product needs additional development of the system, resulting in lost time, cost and resources. Slowing down the whole process resulting in servicing the customers in need.

The CBS ecosystem is changing, in recent years, both the IT decision makers’ and the banking executives’ understanding of CBS have matured’. These developments have brought improvements in planning, project management, and platforms. Newer generation of Digital Core Banking Platforms like ApPello are designed more on a micro services principle, providing the highest level of flexibility to the banks to manage their processes and products. Micro services clubbed with open APIs and low code platforms, allows banks to plug in a core banking platform into their existing landscape without the need for rip and replace.

ApPello’s Digital Platform not only helping banks in offering digital services to their customers with less resistance, but also offers a smooth transformation path without disturbing the ecosystem – without the need for spending high costs in maintaining their inhouse legacy systems. The ApPello platform offers the following value in short to midterm:

Smoother & Faster Implementation

Next-generation CBS platforms deploy and integrate with emerging technologies faster, due to plug and play integration within industry leading ecosystem partners. The cloud native platform offer many technology benefits, one in particular is elasticity and high availability, making deployments much easier, smoother and on-demand. ApPello’s Digital Core Banking is on cloud to not only provide the benefits of the platform but also the easy of deployment and change.

Bigger payoffs

Banks and financial institutions need to help their customers in a timely fashion. A digital and omnichannel approach not only results in customer satisfaction, but also helps them increase stakeholder value by reducing the overall cost and improving efficiencies.

Vendor Independence

With a flexible workflow and business rules engine at heart ApPello’s digital platform, banks are able to design new processes, modify existing processes and deploy it themselves, without the need of an ApPello engineer. The low code drag and drop enabled screen design of the platform, helps banks in creating their own channels without the need of an external agency, vendor or IT. Open API integration enables banks to easily integrate their internal systems with other third parties.

Lastly, ApPello’s overall platform is built with different core services across the customer journey being loosely coupled. This is to ensure that they can be used separately without the need of deploying the entire platform or need of using only ApPello family of products for rest of the customer journey. These inherent capabilities make ApPello’s offering extremely vendor independent.

A new digital service, for example a COVID-19 business resilience loan, could be made live in a 2-3 months period. This is the true power of adopting an open digital core banking platform from ApPello.

In conclusion, the advantages of adopting a modern digital core banking platform will not lead banks to a vendor lock-in rather the opposite, it will empower them to serve their customers and stakeholder even better.

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