After our first round of head-to-head competition, we were sorry to see some digital banking solution providers go. Similar to the NCAA Men’s and Women’s teams (We are still heartbroken over UCF), some of these solution providers were good, it just wasn’t their time. Many of the banking platforms didn’t make it as they were not true cloud-based, didn’t have our desired architecture or had little in the way to support business banking.
Some, however, met almost all of our criteria and will likely prove worthy competitors.
We narrowed down the list of banks to 14 which includes one tie between Crealogix and KONY that were neck and neck when time expired. As is our protocol, we advance all ties and then pair them with other winners for the next round.
This leaves us with the following field:
Some Important Points
Going through a competition like this brings up several points that all banks need to consider.
Flexibility vs. Time-to-Market: Some of the platforms, such as Backbase, didn’t advance because they were too flexible and while they provide some out-of-the-box solutions, they would also require more development resources than we could afford. Nothing wrong with the platform –just not for us. Our point here is it pays to understand how much app or widget creating you are going to do on your own. We are looking for that 50%/50% sweet spot where the platform has some tested solutions but also allows us to modify or create our own.
Cloud vs. Cloud-native: Some of these platforms that didn’t advance, didn’t advance because they were not “cloud-native.” That is to say; they were not designed as one code base managing multiple banks. Many of the traditional platform providers, for example, were developed for an on-premise installation and if a bank wants the cloud version, they host that single instance in a cloud such as Amazon. The problem here is that the bank doesn’t get the advantage of an upgrade until it is made available to that specific version that the bank is on. If the bank has done extensive customizations to their version, they may never get the upgrade. While some bankers view having multiple banks on a single platform (in what is called a multi-tenant environment) as a disadvantage, we see it as a clear long-run advantage.
Architecture and Speed: Before bank management embarks on choosing a new core or banking platform, it pays to have an educational session on architecture. Many of the above platforms have different constructions providing some pros and cons. Some use the traditional server/client structure that is ideal in a batch processed world. The problem is that with the advent of real-time banking, many of these platforms are too slow. In preparation for real-time, banks will likely want a platform that leverages a microservice or event-driven structure to allow for different services to be evoked (such as ID validation) with only a microsecond of delay. While much of these details have traditionally been left to IT, as more and more banking goes digital it is incumbent upon all banking managers to understand the basics so that more informed decisions can be made as to strategy, partner selection, and process.
Look for another round soon, and we will keep updating this space on some of our important lessons learned that will hopefully save you time and allow for better decision making.
Submitted by Chris Nichols on March 27, 2019