Types of core technologies and business cases

In today's financial landscape, institutions face the challenge of modernising their core systems to remain competitive. While it is not necessary to change the core banking system every five years or every time a new technology emerges, it is necessary to consider modernisation strategies to stay relevant. There are two main types of core technologies:

• Established core systems: Traditional systems that have evolved to meet modern needs. They are robust and have a proven track record in dealing with complex financial products with higher regulatory requirements. Traditionally, they have been the option of choice for large banks that handle high-value transactions and products with multiple functionalities. Although not initially cloud-native, they are cloud-compatible and can communicate through RESTful APIs. Examples include: Oracle, Infosys, Temenos and Finastra.
   
• Next generation core systems: Developed from scratch on top of modern technologies. These systems are highly flexible and designed to operate in real time, being cloud-native and using RESTful APIs. Digital banks and fintechs were early adopters of these systems given their flexibility to rapidly launch digital products at lower cost. However, as these systems have matured, larger banks have also started to integrate them into their core banking stacks. Examples of these include Thought Machine, Mambu, 10x, Engine by Starling, Tuum, Skaleet and Finxact.

At GFT, we understand that every financial institution has unique needs. The key to unlocking exponential value lies in finding the right recipe, combining the sum of technologies, accelerators and expertise. It is not a black and white situation where established cores are only for traditional banks and next generation cores only for digital banks. Each business case is different and there can be multiple successful combinations depending on the specific needs and strategic objectives of the institution.