While core banking system is not a priority for most banks, this is the right time for banks to shift from a reactive phase to a proactive phase.

1. Core Banking on Cloud
Over the years, the cloud has emerged as a mainstream technology for the banking sector.
Despite its uptake, banks have taken a measured approach to cloud adoption. Citing security
and regulatory concerns, most banks are in the early stages of cloud maturity.
The COVID-19 pandemic created a new urgency for cloud solutions. With continued banking
disruption, the traditional core architecture is no longer enough to deliver new products and
services at the required pace. Most banks are aware of the importance of core banking systems
but have no defined strategy.
The question that most bank leaders have to address is can next-gen cloud-based core banking
systems replace traditional core banking systems?

2. Banking innovation roadblocks
Legacy technology is a major stumbling block for banking innovation. The monoliths are
cumbersome and running on obsolete technology with little to no updates. Legacy systems
form the core of banking operations and have stood their ground through the technological
storm. But these systems weren’t designed for the fast-moving digital age.
The rigid organizational structure and siloed nature of working is also a barrier to innovation in
banking. While we see a rise in cloud adoption, the shift means more than just migrating the IT
assets. The complete adoption of cloud calls for an agile, forward-thinking mindset. The culture
of innovation requires a change in attitude and adopting a customer-centric approach. Banks
are typically risk-averse, especially when it comes to core replacement. The process is
expensive, time-consuming, and even a tiny misstep could lead to service disruption and attract
regulatory scrutiny.
Adopting innovation accelerants
Next-gen cloud-based core banking systems address evolving needs of the banking market.
According to Mckinsey, the technology could significantly reduce time to deliver new
functionality such as address change from a mobile application or peer-to-peer payments. Cost
reduction, scalability, and efficiency are driving the cloud market.
Operating in the cloud offers banks the key differentiating factor in a competitive landscape.
Some of the key benefits include:
• Reduce time to market new products – Cloud environment provides agile and DevOps
environments that support the rapid development of products, services, or feature
enhancements being brought to the market fast.
• Agility to innovate – Capitalize on market opportunities by leveraging emerging technologies
such as artificial intelligence, machine learning, blockchain, etc.

3. • Reduce overall operating costs – Banks can reduce their overheads by not owning every IT-
related asset. Rather these can be purchased as services from various cloud providers and
eliminate the need for on-premise servers.
• Enterprise synchronization – Cloud core banking unifies banking functions, standardize
applications and processes. The synchronized systems allow for easy alignment of technology
and business operations. Several service providers help banks bring together their operations
and functions with an integrated platform. For instance, Temenos has been the number one
core banking solution in the world, supporting more than 3000+ customers. They are providing
cloud based platforms with cloud-native microservices architecture approach and tools. The
integrated platform-led core banking solution is cloud-agnostic, API-led, and artificial
intelligence-enabled. Temenos cloud based solutions are highly secured and compliant,
designed with robust practices, policies and procedures for assuring comprehensive customer
protection.
The conventional thinking for moving Core banking on cloud
While legacy core banking systems are known to be non-agile, rigid, scale-constrained, and
working in siloes. Most banks still rely on it due to challenges and conventional thinking in
adopting cloud-led core banking such as:
• Moving too fast – The banking application landscape is one of the most complex software.
Thus, upgrading legacy systems is difficult and expensive. Moving to the cloud too fast also
slows down the pace of IT modernization.
• Complete reliance on the cloud – Traditional banks are still hesitant to abandon a functioning
system and rely heavily on the cloud. With stringent regulatory and compliance norms, the
interaction and dependency on third-party is cause for data security concerns. Moreover,
handing over control of critical business applications to a third-party service provider is a risk
that most banks do not wish to take.

4. • Evolving relationship between data, regulation, and innovation – Over the years, the
regulations have increased focus around consumer data safety. From GDPR to open banking
regulations, banks’ overheads have increased due to changing regulations and restricted their
ability to innovate. Balancing regulations and innovation is an uphill task. But banks can work
with regulators and cloud providers to provide a transparent process that would placate the
involved parties.
The COVID-19 pandemic highlighted the need for more user-centric digital solutions for
employees and consumers. As the world came to a halt, cloud-based services were the need of
the hour for businesses to sustain themselves. With cloud-led core banking systems banks can
accelerate and scale their next technology transformation, future-proof the foundation against
further crises.
While core banking system is not a priority for most banks, this is the right time for banks to
shift from a reactive phase to a proactive phase. Temenos cloud based core banking solution is
the right choice for banks to #AccelerateNext. Maveric as a certified Temenos partner, offers
end-to-end analysis, implementation, upgrade and support services. With our proven product
mastery, our solution specialists guide banks to extract maximum value from their Temenos
investments. Get your bank future ready with cloud based core banking solutions.
Original Source: https://maveric-systems.com/blog/core-banking-on-cloud/