Financial institutions continue transforming and changing in response to macro-trends, such as a global financial crisis, regulatory reforms, birth of new competition, and the recent global pandemic. The macro-trends have all had a major effect on the world and banking. With particular focus on cloud-based digital banking and the SaaS solutions supporting such a transformation, banks were initially skeptical when new cloud-based banking solutions were hitting the market. Now, there are banks using renowned cloud vendors to support the onboarding of new customers digitally, with new competition entering the market. This evolutionary step in cloud-based banking for core services is also in response to consumers going digital. 

Luke Penca, a Managing Principal in Capco’s Technology Architecture practice who possesses 20+ years of diverse IT experience, shares perspective on the cloud-based evolution and technology. “The API economy continues to turn banks inside out,” he says. “As such, IT must adopt flexible ways of working with FinTechs through new abilities and skillsets necessary to meet these partners in the cloud.”

Capco has continued supporting banks investing in digital transformations and has invested time with SaaS companies to deliver API-driven, cloud-based core banking technology that creates a complete digital transformation service. These cloud-based technology solutions have a mission to reimagine the digital banking experience across the industry, offering banking and credit unions of all sizes the ability to take control of their digital experience. 

For example, Capco recently supported a partnership with a large financial institution (FI), to increase deposit growth and brand reputation by expanding the existing Certificate of Deposit (CD) offering to retail depositors while simultaneously expanding the product suite by offering high-yield savings accounts in a low-cost manner across digital channels. In the FI’s current state, CDs were onboarded manually or through a file upload, onto a simple off the shelf software program called Mimics.  As the FI examined the ability to increase deposit growth, strategic decisions were aligned to seek digital channels that are more robust, flexible, and offer direct integration as a platform of complementary services.

To facilitate this, cloud-based vendors were selected to offer core servicing, onboarding, and back-end servicing, via a rapid and low-cost cloud-based deployment. A real-time, cloud-native core banking system was selected, with a 100% accessible open banking API that meets the scale, performance, and regulatory requirements of the largest U.S. financial institutions. This was achieved by focusing on the most crucial component of the core abstracted from ancillary functions, such as mobile banking, unified communications, branch, item processing, and statements – providing maximum flexibility for innovation. These offerings are complementary to the next generation of core banking with the following highlighted features.

• The Core is cloud-native and built without layers of legacy technology, making it globally accessible, highly  scalable, and cost effective.

• The Core enables true real-time, customer-centric banking. A temporal database allows the context around any historical transaction, event, or application occurrence to be re-created as of an    instant in time.

• Extensibility is the ultimate in future proofing. Modern design and novel engineering allow banks to modify the Core as a service rapidly and easily with proprietary functionality.
• The Core is an expansive financial services model that encompasses thousands of banking functions exposed as API endpoints.
  

The evolution of cloud-based banking solutions continues gaining more warranted attention in our increasingly digital world. Capco’s aligning resources with the expertise to support this trend. Lessons learned and experience are critical to address the market opportunity with safety, speed and soundness. To further explore the benefits of cloud-based banking solutions, and the effect of long-term resilience and cost savings, please don’t hesitate to reach out.