The Core Is All Right [Video]

  • Philip Ryan
  • April 10, 2015
  • 0

© Can Stock Photo Inc. / Koufax73They’re everywhere, outdated bank cores — and that may be ok.

We all know about the problems with outdated cores running Mad Men-era software, and a few bold banks, notably BBVA Compass, have installed new cores running modern software. IBM Banking released a video last week discussing the problems with legacy systems — silos, manual processes, unstructured data — and possible solutions. It’s below.

But maybe the core running transactions at the heart of most banks is not so rotten after all.

John Lankenau, vice president of product management for Primatics Financial, compared cores to cobblestone streets, great for walking and maybe horses and wagons, but not suited to Ferraris, and we’re in the age of Ferraris. That doesn’t sound so great. But Lankenau pointed out that bank cores are still here and functioning, just as cobblestone streets still exist beneath layers of concrete and asphalt.

“Core systems are good at one thing, but shouldn’t be asked to do too much,” Lankenau said. “They manage the relationship with the borrower in the sense of recording account balance, and payment due dates, and they do that perfectly. They weren’t designed to adapt.”

The problem, he said, is that over the years accounting and risk functions were built into the core, and it is doing things that it is not ideally suited to so. A stripped-down core, however, could keep on working for a long time to come.

Now, since Primatic sells solutions that do just that, Lankenau’s words should be taken with a grain of salt. But it’s also true that cores are basically working fine as the beating hearts of banks, and cloud-based solutions, or more broadly what Saket Sinha, VP of banking and financial markets for IBM, calls CAMSS — cloud, analytics, mobile, social, and security — can enhance the customer experience and meet evolving customer demands.

“In the days of paper workflows, manual processes, there were things banks couldn’t do,” Lankenau said. “But the technology has changed. There’s no technological reason why a bank can’t do anything it is asked now to do.”

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Philip Ryan is Senior Editor of Bank Innovation and Senior Director of INV Fintech. He began covering financial services in 2012 and has more than 15 years' experience in online journalism, which makes him quite old. He can be reached at

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