What is Core Banking?

What is Core Banking?

Banking. It’s a complex and technical business that has evolved rapidly over the past 20 years. Although much of the change is thanks to advances in technology and ever-growing consumer demands and needs, the pioneering innovators who created the first iteration of financial services may go back further than you think. Paul Scott, Chief Operating Officer explores what is core banking.

What started out as a traditional deposits and loan function with a simple transactional purpose, has evolved into a core staple of our everyday lives, providing products and services that meet our modern, ever-changing needs. Much of what we take for granted today is powered by core banking; the backbone of financial services’ operating systems and the innovation responsible for seamless transactions and round-the-clock service. 

As the financial services sector continues to face disruption by technology, startups, customer preferences and things like crypto; core banking is an integral cog in the machine.

Nowadays, consumers expect to access their money and make transactions with a tap and a swipe. Traditional legacy systems have served both the institutions and customers well, however, with new disrupting technologies, digital innovation in banking, advent of cloud, and open APIs, the need for both reliability and transformation is paramount. While legacy core banking systems offer security and dependable services, they are becoming increasingly costly to maintain and their ability to easily integrate with today’s banking ecosystem is low. 

Core banking systems usually interface with multiple systems and consistently handle high volumes of transactions, a reflection of the digital world we live in, where online banking and self service is the norm. Issues like prolonged outages and even minor disruptions, not only damage reputation and invite regulatory scrutiny but also shake customer loyalty and delay product innovation. 

Relying on a legacy system may impact your cloud technology roadmap, one of the many tools that help financial institutions stay competitive in today’s business environment. As financial institutions across the globe spend millions of dollars investing in the future, it’s important to consider how main-frame legacy architectures and infrastructures rely on modern systems. Here at ClearPoint we have partnered with Thought Machine, a next generation, cloud native, core banking engine. It is powered by Vault, a scalable, DevOps enabled, event driven system, aligning strongly with the high performance engineering capability we value at ClearPoint. 

With a disrupting technology landscape and increasing competition from Fin-tech companies and neo banks – in addition to moving into a cloud generation – core banking legacy systems are in a desperate need of modernisation to stay ahead of the curve. In addition to real-time transactions, banks need to be prepared to release new features, scale up by partnering with fin-tech companies and pivot their offering as customer expectations change, all whilst remaining future-proof. Let’s not forget that while this innovation progresses behind the scenes, teams are managing vendors, attempting to design a seamless consumer experience and navigate a shallow talent pool due to the pandemic. 

It is time to design and execute an explicit and agile core banking strategy that empowers the customer to have greater freedom and flexibility, and enable safer, faster and less cumbersome transactions from anywhere in the world. 


Overall, financial institutions are leveraging the benefits of engineering solutions to better meet customer and business needs. We help organisations leverage technology solutions and platforms that enhance ways of working and customer satisfaction. ClearPoint has over a decade of experience working with banking, investment management, wealth and insurance organisations and we can help you meet strategic, design and implementation goals. Find out more about our experience here.

Empower your digital journey