xpate has recently launched an in-house built core banking solution which links merchant and acquirer systems to offer agile, flexible and harmonized payment processing, and crucially helps them to bypass legacy IT platform limitations. We spoke to xpate CEO & Founder Mihails Safro about this specific software solution and points companies need to cover when dealing with one.
Finance is among many industries that have truly benefited from digitalisation. A recent technological hike gave birth to 4 generations of core banking, where the new was miles better than the old. However, while the first three core banking versions were a true innovation for their time, now they are a challenge to the latest, fourth generation. The reason behind it is that the legacy core banking systems were built several years ago and can’t withstand the test of time: the financial industry has become increasingly data-driven. Furthermore, global e-commerce is on the rise making cross-national payments more and more complicated – sellers and buyers can no longer wait for 2-3 days for the payment to arrive.
The continued use of legacy solutions put the entire world trade in question – after all, it limits the seller’s profit and ability to expand worldwide.
Modern Core Banking is different technologically. As a result, a company will need to audit its current system and most likely radically start from the beginning – cancel the old and move on to the new rails.
Understand the Core Banking
Yesterday, people were happy with the option of moving money securely from the comfort of their homes. Today, digitalisation is making customers more and more demanding, thus putting more and more pressure on fintech.
In the past, security and transfer execution were enough. While the former and the latter remain top priorities for banks, they must offer much more than that to attract new customers and stay competitive. Core Banking stands at the heart of all operations and must quickly adapt to the changing environment and be agile. The solution also must be easy to navigate, highly responsive, and provide a customer-tailored user experience.
Rome wasn’t built in a day. Creating core banking is not an easy task and requires a lot of preparation, as well as a clear definition of its key parameters and components. Once identified, creating modular architecture becomes possible, which is the foundation of the core banking that will help it adapt to consumer demands without putting too much pressure on the system.
Finally, once the company has identified all the required parameters, the next question to tackle is the functions the core banking must support. They might be KYC, card issuing, flow or account management. Options are limitless.
However, before diving deep into building a solution, it’s vital to understand its purpose and know how many resources are required to pull everything off.
Choose Your Way
Two main options always on the table are building the solution and getting a ready-made one. Both the former and the latter have perks and drawbacks. When it comes to in-house creation, an obvious disadvantage is the cost and time.
In order to have a rigid core banking system, every financial company, whether a big institution or financial startup, needs a reliable partner that can help install modern solutions, upgrade an ecosystem, and outsource many of its most complex components. Recently, xpate launched its core banking solution designed to connect acquirers with merchants to provide modern, agile, and smooth payment processing that can avoid limitations of the out-of-dated IT infrastructure.
Core banking is a complex solution that requires a lot of preparation and resources. The in-house build takes some time, and even more time is necessary to adapt all the components to the new technology. However, core banking is vital for any financial company to remain competitive and provide top-notch security and user experience. However, while creating core banking on its own is inherently complex, some providers can upgrade outdated systems quickly.