Faced with the need to adapt to ever-advancing technology, banking institutions have historically struggled to implement new systems and integrate these advancements into their existing technology platforms. Selecting and implementing a new core banking platform can boost scalability and profitability. When approached strategically, the process is worth the effort.
Critical Phases of the Core Banking Platform Selection
Many financial institutions benefit from a phased implementation. This practice breaks down the complex task of selecting and integrating a core platform into individual phases that can be approached one by one.
Phase One: Business Justification and Action Plan
Develop Business Objectives
When selecting a new core, banks should assess both present and future needs, as well as any challenges standing in the way of accomplishing their business objectives. Building the business requirements with as much detail as possible equips the institution with the knowledge necessary to select a core banking platform that closest meets their underlying needs.
Define Future Requirements Through Data Analysis
Data analysis, specifically delta analysis, describes and scopes future requirements. Delta analysis supports banks in anticipating future operations, serving as the baseline for new ways in which banks can reach and define their potential future. These practices are integrated into the core system in phase two and include selecting the right architecture, ensuring the flexibility and scalability of the new technology platform, and more.
Phase Two: Selection of the System and Vendor
Evaluate Available Options And Select the Right Architecture
Selecting the right architecture for a banking system is essential and must match the core banking system, and the bank’s respective requirements. For example, most financial organizations operate within a banking system that amplifies a customer-centric environment whose functionality, among many other aspects, serves to meet the bank’s corporate objectives and goals. To do this, many banks are now gearing up to ensure more flexibility and scalability in their systems, which can require an open and flexible architecture.
Consider the Flexibility and Scalability of the New System
The flexibility and scalability of a bank’s core banking platform of choice will determine how effectively the institution can grow and achieve its objectives. The more flexibility a bank’s system incorporates, the better adjusted that bank is to immediately and seamlessly adapt to customer needs in an ever evolving and highly competitive field. Similarly, investing in and focusing on scalability impacts growth rates within the market and commercial environment, especially in terms of products and delivery channels.
Assess the Vendor’s Ability to Meet Business Objectives
One of the many elements that banks must thoroughly assess is how well vendors can meet business objectives. If the bank and vendor have different goals or, as important, means of achieving these goals, then the relationship will require more time and cost than necessary, and future collaboration will be fraught with differing opinions and will stifle quick and adaptive change. Much like hiring an employee, hiring a strategic partner requires a cultural evaluation to ensure the two firms are aligned with how best to support one another.
Phase Three: Design, Test and Implement
Develop Detailed System, Interface and Data Conversation Plans
By establishing a bank’s core design and interface early as a foundational element driven by robust data, projects will run into fewer potential problems. Detailed systems should include:
- Business process design
- Product and services design
- Customer relationship design
- Systems specification design
- Interface design
- Data conversion design
- Interoperability design
Comprehensively Test the System
As the new core banking system becomes ready, existing data will need to be migrated and converted for use in the new environment. Careful consideration and planning during the previous phases can streamline and even automate much of this step.
It is essential to perform thorough and repeated testing of the system at each stage. To ensure success in the implementation stage, it’s critical to check that expectations are being met as each element of the project is tested. Developing pilot projects, deconstructing larger projects into smaller steps, and garnering good communication skills within teams all play a role in testing the system. Performing at least 2 mock conversions will ensure that all data migrates as expected and that all interrelated systems operate as expected.
Prepare for Go Live
Months of hard work planning for, selecting, designing, and testing the new core banking system all culminate for the Go Live weekend, where the old systems will turn off and the new systems will turn on. Despite lots of hard work, organizations should plan for some customer disruption.
Systems changes not only impact employees; customers will also have a learning curve to adopt to new customer facing systems. The best course of action is to communicate with customers often during the process. Provide detailed timelines and specific expectations to minimize frustration. The organization should also plan for increased calls and customer outreach for a few weeks after the go live. Planning for this in advance will ensure that the organization has the proper staffing levels to quicky help customers impacted by the change.
Phase Four: Maintain Smooth Operations and Develop Interfaces Across Delivery Channels
Phase four considers the ongoing challenge of maintaining smooth operations between more than one delivery channel while continuing to maintain technical currency. The organization must implement an ongoing solution management process to ensure future functionality and that as business requirements evolve, the organization can implement change quickly and easily. Proper design and implementation are critical, but ongoing care and support are required to provide years of lasting performance
Assessing Overall Risk Mitigation and Financial Implications
Implementing a new core banking platform is a significant task and one that should be approached with due care. The cost implications of switching core banking platforms cause some organizations to shy away from the possibility, but making the switch is critical in the ever-evolving digital landscape. Newer core platforms provide higher risk mitigation and streamline financial processes for better user experience, improved scalability and more agility than ever before. As competition for technology continues to increase, financial institutions may even save money while increasing efficiency and user satisfaction when changing their core banking system.
Reach Out to Hartman to Learn More about Core Platform Selection
The switch to a new core banking platform is complex, but it does not need to be unnecessarily costly and difficult. The professionals at Hartman Executive Advisors help financial institutions to pivot without incurring wasted spending or time. Reach out to learn more or to schedule an appointment to get started.
