Bridging the gap between “Banking in a Box” and “Fully Customizable”

Bridging the gap between “Banking in a Box” and “Fully Customizable”
November 8, 2018 YellowDog Site Admin

The core processing system your Financial Institution runs today will determine whether you can remain relevant in today’s marketplace, or fade into the sunset going the way of the dinosaurs. Automation is the key to ensuring continued relevancy.

Core processing systems typically fall into two extremes, “banking in a box” (BIB) and “fully customizable” (FC). Each has its merits, each its drawbacks. Today’s fast paced technological environment is largely dependent on a Financial Institutions’ ability to move from BIB to FC, while maintaining as many advantages and minimizing the disadvantages.

“Banking in a Box” systems are prevalent in the industry, providing financial institutions a low cost, but typically inflexible, environment. While the cost of ownership is an important factor when analyzing a core system, the future relevancy of the organization has become more dependent on its ability to offer new, and innovative, products and services. The pace of these offerings from external players is speeding up. New competitors are rising and taking market share. Offering these services in a BIB environment requires the resources of the Core Vendor. At best, the big four core vendors are slow to respond and invest in making these systems compatible. At worst, these systems are too confined, or the architecture too old, to accommodate new services. An inflexible core environment is a liability in today’s market. Flexibility and speed to the market with new products and services has become the purview of the “Fully Customizable” core systems.

“Fully Customizable” systems offer the flexibility to add and change products or vendors without having to wait on the core vendor to support them. The ecosystem for these core systems is often complex and variable, a result of building a system to maximize flexibility. The downside to these systems is that they are generally more expensive to maintain, requiring more staff and with highly technical skill sets. All that flexibility comes with lots of choices, which can result in Financial Institutions being paralyzed in making decisions. Because of the higher overall cost of ownership items like cost reduction, process management and the effective deployment of human resources often become top priorities for the IT Organization. The competing priorities of low cost of ownership and effective deployment are bridged using automation.

Automation bridges the gap between “banking in a box” and “fully customizable”. The inflexibility of the “banking in a box” will ultimately render these systems irrelevant. A “fully customizable” system is more expensive, risking an unmanageable rise in operating cost. To mitigate these issues Financial Institutions will have to drive cost out of the organization and optimize deployment of these systems.

Automation provides this mitigating point. By automating processes’ and procedures, automating the testing of upgrades and enhancements and automating the delivery of services to your customers/members, a Financial Institution can minimize the organizational cost of delivering these services while maximizing the benefit of offering these services. Automation is the bridge between maintaining an appropriate cost structure for your underlying systems and offering the flexibility of new products and services to remain relevant in today’s market.

At Procurity we are dedicated to driving automation within Financial Institutions. We automate testing to start, fostering a culture that is supportive of automation and building upon these successes to drive value throughout the Financial Institution’s organization. Please contact us today if you would like to hear more.