Ways in which software is used in Banks
Financial services are highly intertwined with information technology. In German alone, the banks invest about 15 billion euros per year in Information Technology. A larger amount of this money is spent in systems that involve core banking.
The banking system is rigid and very complex. Some of the systems that are used are not able to catch up with today’s needs. Many banks have been forced to rethink their strategy. A good example is the Deutsche Bank which has an objective of replacing some of its old software. They need software which is flexible unlike the standardized software product that they are using currently.
The banks should understand the type of software that they need. They should get all the important features that they require to serve their customers more efficiently. Some banks prefer standard software while others go for proprietary software. Many studies have found out that banks are vigorously modernizing their software services at fast pace.
The banks from all parts of the world should learn to adopt the best core banking software. A proper integration should be done to make sure that the banks get the best services.
Many banks carry out projects to renew their software services. These projects are aimed at four major areas. These areas are: banking control, sales, business modeling and finally transaction completion.
Reasons for introducing new Core Banking Software
There are factors that influence decision makers to introduce new core banking software. It is a common practice for the banks to use a particular software solution for a considerable period of time. This is usually a decade or even longer time. Banks just do not change their core software without putting enough thought into it. The most common reasons for introducing new software include: cost-effectiveness, functionalities, in-house capacity and IT strategy.
Majority of the banks have reported that the software functionalities are the most important factor that influences the decision to change the core banking software.
Major Services Expected from a modern banking software
The banks expect to get services which are tailor made for the banking sector. The decision makers have to be convinced about their profitability before they embark on new banking software.
The management asks plenty of questions concerning the new features presented by the software. The new software that is adopted should be capable of supporting the processes which are critical to the banking business.
Some banks prefer software which can be expanded very easily. It should also be relatively easier to use in the work environment. The new core banking software should also be capable of supporting new banking products which are in the market. The software should also follow some established standards and make use of the open architecture.
The main requirements of a core banking system depend on the size of the company adopting the software.
Things to watch out for when choosing software for a bank
Once a bank decides to make use of a brand new core banking software, there are a few factors you need to take into consideration.
The software should be relevant to IT. It is more cost-effective to adopt an application that is externally hosted.
The Application is also required to adapt to the bank’s own processes. We have to agree that all banks are different in one way or another.
The core banking software is used in managing and recording transactions which are made by customers in their accounts. The software makes it possible for customers to do their banking from anywhere. That means that the customers do not have to go to their branch to carry out the banking services. The database of the bank is usually connected to the other channels that are normally used by customers such as SMS based banking, ATMs and Internet banking.
The banking software is normally used by millions of customers across numerous branches owned by the bank. It is clear that the software must be capable of operating on many machines even for small sized banks. The core banking system presents a monumental investment for any banking business. It’s equally expensive to run and maintain the software system for a bank.