The banking industry is witnessing large-scale changes. We are in the age of the empowered customer, which is transforming the way financial products are created, delivered, and serviced by banks. The increasingly digital world has created a level-playing field for retail banking. Their core banking systems, however, are stunting their journey toward sustainable growth.

The modernization of the core banking systems requires significant time and investment. It is, therefore, imperative that banks adopt a strategy to address the complexity, costs, and risks involved in replacing aging systems.

The following factors are necessitating the shift to more agile core banking solutions and core banking services:

• Increased customer expectations: Customers demand improved services through channels of their choice. Additionally, they want to be able to buy and view accounts across applications and geographies. A heavily customized core banking system can prevent customers from getting a comprehensive view of their financial information.
• Growing competition: Banks have to introduce new functionalities and products or services (through social media, mobile, etc.) to market themselves better. Existing systems may hamper product development and increase the time to market.
• Stringent regulations: Regulatory requirements have increased for financial institutions. To enable the integrity of their reporting, banks have to confirm that their systems are well integrated.

Other factors, such as the need for greater system flexibility, outdated systems and processes, and system inflexibility, are driving the process of core banking modernization.