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Empowering Banking Systems for the Future: Unraveling shaping forces and core system change

By: Venkataraman Balasubramanian
August 2, 2023
3 min read

August 04, 2023

Modernization of core systems has largely become imperative in banking. But what is a core system in banking? The term “core” emanates from the era of branch banking when banks knew their customers based on the servicing branch. In essence, customers were segmented by the branch that provided all services to them. With the growth of individual mobility (through travel, better infrastructures, technological advances, among others), the need to bank beyond the customer’s branch became essential. This meant that another branch would need to know the customer’s account details to provide services, giving rise to the need for a system that interconnected branches both technically via networking and via application. This type of service was termed Centralized Online Real-time Environment, giving rise to ‘Core’ banking. These systems began in the early to mid-1980s and have been continuously enhanced over the past several decades.

Today’s bank systems can truly trace their legacy to those of the 1980s and 1990s, continually to address the challenges and opportunities of different decades. They have become significant monoliths in size and complexity, deviating significantly from their original purpose of true account processing and posting engines. As a result, a simple change to a banking product in response to market demands may take a significant amount of time to implement, as all the various interfaces need to be tested after the application itself is tested for accuracy, assuming the people possess the necessary knowledge to make the required changes.

These problems are not trivial as knowledge of the existing system, an aging workforce, and programming languages that are no longer widely taught, along with understanding system interfaces and the impact of change on downstream and upstream systems, all play a compounding role when making even simple changes. These issues have taken away agility from a business perspective for product innovation and reacting to market needs, and they also have the potential to create compliance issues. For corporate and commercial clients, these issues lead to a multitude of problems, from a lengthy onboarding process to poor customer servicing due to highly fragmented systems.

Over the years, what started with deposit systems was also needed for newer systems catering to various other types of needs: lending (mortgages, consumer finance, car loans, to name a few) and a variety of products to meet the ever-evolving needs of more sophisticated customers.

Against this backdrop, banks envisioning a change to their core banking systems have always delayed the obvious. However, its time has now arrived. Over the next several months, we at Zafin will take a critical look at the forces shaping this modernization, how to accelerate and derisk the program, and explore successes with actual case studies.

Stay ahead of the curve. Join us next week for the latest revelations that will redefine organizations.


Founded in 2002, Zafin offers a SaaS product and pricing platform that simplifies core modernization for top banks worldwide. Our platform enables business users to work collaboratively to design and manage pricing, products, and packages, while technologists streamline core banking systems.

With Zafin, banks accelerate time to market for new products and offers while lowering the cost of change and achieving tangible business and risk outcomes. The Zafin platform increases business agility while enabling personalized pricing and dynamic responses to evolving customer and market needs.

Zafin is headquartered in Vancouver, Canada, with offices and customers around the globe including ING, CIBC, HSBC, Wells Fargo, PNC, and ANZ.

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