Can a core banking system evolve with you?

Transitioning away from legacy systems has been a hot topic in banking for some time now. Incumbent players have sought to move away from their monolithic back-ends in an effort to keep up with newer challengers which have launched on completely modern core banking systems. As digital transformation processes near completion, the question becomes: can this new system evolve with your business? How can you avoid ever becoming legacy again?

A modern core banking system should, naturally, be able to demonstrate its ability to support the immediate objectives of the business. For it to be truly effective, however, it must also demonstrate its extensibility, to ensure it can meet the future needs of the business – even if these are not currently apparent. The answer to this lies in configurability.

Extensible core banking

The selection process for a core banking system can be particularly arduous, and for good reason; implementing a core banking system that later turns out to be incompatible can be catastrophic for a business. Co-operative Bank is probably the most classic example of digital transformation gone wrong, with the haphazard project costing the company approximately £300m. 

“It was beset by destabilising changes to leadership, a lack of appropriate capability, poor coordination, over-complexity, underdeveloped plans in continual flux, and poor budgeting.”

Sir Christopher Kelly, The Kelly Review, An Independent Review of The Co-operative Bank

Weighing up the functional coverage of prospective tech suppliers is, naturally, important. Advancing to the implementation stage only to then discover a significant functional gap can completely derail the project. The trade-off can often be viewed as a choice between a core replacement that is narrow and modern or one that is broad, deep and ageing.

However, equal weighting should also be given to the ability of these suppliers to extend their functionality. Next-generation core banking systems benefit from greater agility, adding breadth and depth at a pace that far exceeds their incumbent competitors. As such, discrepancies in present-day functionality can be quickly addressed, and in future, new capabilities can be more quickly implemented.

A bank needs a system that can grow with it, adapting to requirements that might not even currently be apparent.

The properties of extensible core architecture


The API-first approach has gained significant traction, as it allows the system to quickly integrate with other third party software, thus adding new capabilities. This is particularly important in enabling a ‘plug-and-play’ approach for financial institutions, whereby they can quickly integrate with new partners and thus extend their offering in a fraction of the time it would usually take.

An API-first approach also improves scalability, as the ability to deploy and replicate different applications becomes simplified.

Read on: API-first vs. API-based: What is the difference?


Modern systems that leverage cloud computing unlock scale and speed advantages by significantly reducing the time to market. Additionally, operating in the cloud unlocks new innovation capabilities, and allows companies to benefit from economies of scale. 

However, simply operating in the cloud is not an immediate game-changer; the most successful adopters of cloud technologies have a well thought-through cloud strategy in place. This involves carefully mapping internal management and operational responsibilities, and developing a clear view on which convenience services are actually needed.

Custom fields

Cloud-native core banking systems benefit from inherent extensibility – users can conveniently add new features in real-time, and make configurations without external input.

Of particular importance is the ability to configure custom fields, that is, a parameter added by the user to gather extra information that is not already present in the core system’s existing fields. These are simple to use, and can be added or removed as needed.

Leveraging custom fields enables the business not only to increase the pool of data gathered, but also to refine processing and analysis to generate actionable insights. Users can enrich existing data, and orchestrate additional layers of information to support the business’ long-term planning. Put simply, custom fields extend what the core banking system is capable of.

Meeting the needs of tomorrow

Consumers today are demanding innovative, easy-to-use products, seamless journeys across digital and traditional channels in real-time, and these demands will continue to evolve.

To avoid the risk of ever losing relevance, financial services providers must ensure their operations are supported by a core system that can meet current and future requirements (even those that are not apparent today).

With a modern system and forward-thinking strategy in place, financial services providers can harness the data and technology available to them in order to gain a competitive advantage long into the future. 

An extensible core banking system is just one piece of the puzzle. Download our latest whitepaper: How to avoid building another legacy bank for all the insights.

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