The rapid rise of neobanks and fintech companies is raising the bar for what customers expect from their bank. For traditional institutions, the question is no longer whether to modernize, but how to do it without disrupting the business.
This article offers a practical overview of modern core banking systems, from their core components and strategic advantages, through the differences from legacy infrastructure, to implementation considerations and provider selection.
Key takeaways:
- Core banking unifies customer and account data.
- Next-gen cores enable real-time processing, faster updates, and better omnichannel experiences.
- Automation and scalable, integration-friendly architecture speed up time-to-market.
- Modern security and compliance features strengthen protection and simplify regulatory requirements.
What are core banking solutions?
Core banking solutions, also known as CBS, are the technological backbone that unifies the bank’s branches. It enables clients to manage their accounts and access key banking services through various touchpoints. These include:
- Mobile apps
- Online banking
- Point of Sale (POS) systems
- Physical branches
- ATMs
What are the benefits of core banking solutions?
Such solutions improve the banking experience for customers while helping banks run more efficiently through a unified, centralized system.
Benefits for clients:
- Bank from any location, at any time (not limited to the branch where the account was opened).
- Use any participating branch seamlessly, with a consistent experience across the network.
- Faster transactions thanks to centralized, integrated systems.
Benefits for banks:
- Treat customers as clients of the whole institution, not tied to a single branch (enables smoother service across branches).
- Centralize banking applications on a secure server, improving control and consistency.
- More efficient data management through a single, integrated system.
Key components of core banking systems
Core banking systems consist of several key components that work together to manage a bank’s essential operations.
- Account management: This comprises account creation, closure, managing account types (checking, savings, loans), and maintaining accurate account information.
- Transaction processing: Real-time or near real-time processing of all financial transactions such as deposits, withdrawals, transfers, payments, and loan disbursements.
- Loan and credit management: Manages the entire loan lifecycle, from application processing and approval to repayment tracking and delinquency management.
- General ledger: The central record-keeping system, tracking all financial transactions and maintaining the bank’s overall financial position.
- Security management: Safeguards sensitive customer information and prevents cyberattacks.
- Reporting and analytics: In-depth analysis of account activity, loan performance, and customer demographics.
- Regulatory compliance: Ensures adherence to financial regulations by capturing and reporting relevant data to regulatory authorities.
- Customer relationship management: While not core to every system, it allows banks to manage customer interactions, track preferences, and personalize product offerings more effectively.
Who should adopt core banking solutions? (banks vs neobanks vs fintechs)
Adoption needs and priorities vary by organization type, scope, and operating model.
| Type | Who typically should adopt CBS | Main reason | Best fit when | Watch-outs |
|---|---|---|---|---|
| Banks (traditional) | Retail, SME, corporate, and multi-branch banks | Modernize and unify operations across branches/channels | Legacy systems slow down product launches or create data silos | Migration complexity, regulatory and integration effort |
| Neobanks (digital banks) | Licensed digital banks offering full banking products | Scale fast with strong compliance and reliability | Rapid growth, multi-country expansion, more products (loans, cards, deposits) | Vendor lock-in, need for strong API and reporting capabilities |
| Fintechs | Fintechs that hold accounts or partner to offer embedded finance | Enable new products without building core from scratch | Moving from “front-end only” to deeper banking capabilities (e.g., wallets, lending) | Licensing/partnering model, data ownership, compliance responsibilities |
Legacy core banking solutions vs. next-generation solutions
Legacy and next-generation core banking solutions serve the same purpose, but they’re built on different foundations.
| Aspect | Legacy core banking solutions | Next-generation core banking solutions |
|---|---|---|
| Flexibility | Hard to adapt; adding new features or digital tools is complex and slow | Designed for agility; easier to extend and evolve over time |
| Integration | Integrations are often heavy and time-consuming | Supports faster, smoother integration with external tools and services |
| Data model | Data often lives in silos, limiting sharing across teams and channels | More unified data access, enabling better consistency across the organization |
| Security posture | Older stacks may be more exposed to modern threats | Modern security practices and tooling are easier to implement and maintain |
| Maintenance effort | High maintenance cost; updates are resource-intensive | Lower operational burden through modern tooling and standardized components |
| Talent availability | Fewer specialists for older languages and platforms | Broader talent pool familiar with modern technologies |
| Innovation speed | Can hinder experimentation and new product delivery | Supports faster product launches and continuous improvement |
| Scalability | Scaling can be costly or constrained by legacy infrastructure | Built to scale more efficiently as demand and complexity grow |
| Customer experience impact | Slower changes can limit digital experience improvements | Enables quicker upgrades to customer journeys and new digital services |
Core functionalities of modern banking solutions
Banks need to not only offer a wide range of financial products and services, but also deliver them in a convenient, secure, and personalized manner. This is where modern core banking solutions come in.
Real-time processing and immediate updates
Real-time processing eliminates this delay. When a customer makes a deposit, withdrawal, or transfer, the change is reflected in their account balance almost immediately.
Unified customer data: The foundation of next-gen core banking
Next-generation banking solutions prioritize a deep understanding of their customers. Usually, customer data within banking systems was siloed. Account information would be stored separately from mobile app activity, and branch interactions would remain unconnected to online banking data. This fragmented approach hindered a holistic understanding of customer behavior and preferences.
Modern core banking systems address this challenge by incorporating unified customer data as a core functionality. It’s a centralized repository within the system that integrates customer data from various touchpoints.
Omnichannel banking support
Modern solutions enable seamless integration with digital channels like mobile banking apps, online platforms, and wearable technology. This makes it possible for customers to conveniently manage their finances anytime, anywhere.
Automated workflows and scalable architecture
Repetitive tasks like account opening and loan processing are handled automatically, freeing up staff for more strategic activities. Automation boosts efficiency and speeds up time-to-market. This is complemented by a scalable architecture that allows for easy integration with future technologies and fintech tools.
Enhanced security with multi-factor user authentication
Multi-Factor Authentication (MFA), which adds an extra layer of protection beyond passwords. MFA could involve one-time codes sent to mobile devices, biometric authentication like fingerprints, or security tokens. It significantly reduces the risk of unauthorized access, safeguarding sensitive customer data and financial assets.
Integrated KYC onboarding
Integrated Know Your Customer (KYC) processes within the core banking system make this easier. This automation collects and verifies documents and assesses risks, ensuring a smooth onboarding experience for customers while meeting all regulatory requirements.
Streamlined mobile banking development
Today, customers expect banks to deliver intuitive, secure mobile apps for seamless on-the-go financial management. Modern core banking solutions address this demand effectively.
Neontri’s Mobile Banking Framework helps banks build secure and scalable mobile banking apps faster with pre-built, secure components. It supports both native (Android/iOS) and hybrid approaches, so teams can quickly construct feature-rich apps without starting from scratch. The framework is designed to reduce time-to-market by up to 30% and make applications 65% safer than typical mobile-based apps.
MBF helps teams deliver mobile banking apps by offering:
- A blueprint for enterprise-grade mobile solutions
- Built-in, verified security architecture
- Less time spent on foundational work
- Fewer repetitive development tasks
- More focus on innovative features and better user experiences
The strategic advantages of core banking solutions
Modern core banking systems provide banks with a wide range of functionalities that enhance customer experiences, streamline operations, and support sustainable growth.
Advantage #1: Personalized banking experience
Modern core banking solutions harness the power of Unified Customer Data (UCD) to gain a good understanding of individual customer needs and preferences. This gives banks the chance to offer targeted financial products, relevant promotions, and personalized financial advice.
Receiving data-driven investment suggestions, customized budgeting tools, and wealth management strategies isn’t just a trend; it’s become a necessity.
Advantage #2: Boosted operational efficiency
Next-generation solutions automate processes like account opening, loan processing, and report generation. This saves staff time for more important activities like fostering customer relationships and offering strategic financial advice. By automating such processes, banks can also reduce costs and minimize errors.
What’s more, scalable architecture allows easy integration with upcoming technologies, ensuring the banking system evolves with business.
Advantage #3: Unified banking channels
Their expectations have shifted toward having banking access anytime, anywhere, and on their preferred device. In the face of these evolving needs, modern banking brings some solutions. It provides flawless integration with mobile apps, online platforms, and potentially even wearable technology.
Consequently, customers can conveniently manage their finances across various channels.
Advantage #4: Comprehensive data protection
With modern core banking solutions, data protection is provided through advanced encryption technologies and Multi-Factor Authentication (MFA). This multi-layered approach protects sensitive customer data from unauthorized access and cyber threats, creating a secure financial ecosystem for your clients. Upholding trust and building confidence with your customer base is very important for long-term success.
Advantage #5: Simplified compliance and risk management
Modern core banking solutions streamline compliance by automating tasks like document collection, verification, and risk assessments for KYC protocols. This speeds up the onboarding of new customers and reduces potential financial risks.
Advantage #6: Future-ready banking operations
One of the advantages of the core banking solution is that the system has been built to be flexible. Their modular design makes it easy to integrate with new technologies and fintech tools. This guarantees that the banking system can adjust to new trends, stay relevant, and take advantage of opportunities to stay ahead of the competition.
Real-world examples: Banks winning with next-gen core banking
Banks globally have successfully adopted next-generation core banking technology. Let’s take a look at some notable examples.
Case study No 1: Banco Santander
As one of Europe’s largest banks, Banco Santander underwent a major digital upgrade by deploying its in-house, cloud-native Gravity platform. In Spain, Santander reports handling 4.3+ billion transactions per year, with peaks of up to 33,000 transactions per second, and shortening new functionality releases from weeks to hours.
The outcome: Faster and smoother operations, around 70% lower energy consumption for IT infrastructure, and industry recognition from The Banker as the world’s most innovative bank.
Case study No 2: JPMorgan Chase
JPMorgan Chase, one of the major players in the United States, has been investing heavily in digital transformation, supported by an $18 billion annual technology budget, including major work across AI and cloud.
The outcomes: Broad internal adoption of AI tools (~250,000 employees with access, with just under half using them daily), improved productivity through automation, and continued innovation across the bank’s operations.
Case study No 3: PKO Bank Polski (powered by Neontri)
PKO Bank Polski partnered with Neontri on two complementary initiatives to strengthen digital banking without a full core replacement.
IKO mobile app: Enables customers to manage their finances securely and conveniently, with continuous improvements such as savings goals, currency exchange, credit-related tools, and advisor scheduling. The app has 8.3M+ IKO applications across a bank serving 12M+ customers, and it ranked #1 globally for two consecutive years in the Retail Banker International mobile banking app ranking.
Data hub offloading system: Reduces load on the core by serving read-heavy access through near-real-time data replication (Cassandra/DataStax-based). The platform supports up to 10,000 requests per second and handles ~70M offloads daily, improving performance and stability for high-traffic digital channels.
The outcomes: PKO positions itself as Poland’s most mobile bank, supported by scalable digital capabilities across both the customer-facing app and backend performance layer.
Strategic considerations for core banking implementation
Successful implementation requires careful planning and consideration of key elements.
Legacy system integration: The critical first hurdle
A thorough analysis of the current technology landscape is so crucial. This will help determine the most efficient integration method, whether it’s data extraction, conversion, and migration, or a phased approach to minimize disruption and ensure business continuity.
Safeguarding customer data during core banking migration
The secure transfer of customer data to the new core banking system is another very important thing to consider. Ensuring accuracy and minimizing the risk of errors or breaches is a carefully planned data migration strategy. It encompasses comprehensive data mapping, rigorous validation processes, and a well-defined migration timeline.
Rigorous security protocols are equally important. These protocols safeguard data integrity throughout the migration process, maintaining customer trust.
Balancing implementation costs with business value
The cost analysis assesses all expenses associated with the implementation, including:
- Software licensing fees
- Potential hardware upgrades
- Implementation service costs
- Ongoing maintenance expenses
- Hidden costs
Driving adoption through training and communication
Implementing a new core banking system is also about people. A comprehensive training program, tailored to different user roles, equips staff with the necessary skills and knowledge to navigate the new platform confidently.
Clear communication addresses potential concerns and fosters a sense of ownership among your team.
What criteria should IT managers use to evaluate and select a core banking solution provider?
Choosing the right core banking partner is a long-term decision as the wrong one can slow down your entire roadmap. Beyond feature lists, here’s what actually matters.
| Criterion | Description |
|---|---|
| Architecture and technology stack | Look for a cloud-native, API-first platform built on microservices architecture. This makes it possible to modernize gradually (swapping out components one at a time) rather than betting everything on a single high-risk migration. Support for event-driven architecture and containerization (Docker, Kubernetes) is a good signal that the platform is built to scale. |
| Integration capability | Check how the platform connects with third-party fintech tools, major payment rails (SEPA, SWIFT gpi, RTP, FedNow), and ISO 20022 messaging. A composable, API-first approach should make it straightforward to connect payments, cards, and lending without heavy custom development. |
| Regulatory and compliance coverage | The platform should come with built-in support for key mandates – PSD2/PSD3, DORA (Digital Operational Resilience Act), GDPR data residency, SOC 2/SOX, and AML/transaction monitoring. Compliance that has to be retrofitted is a red flag. |
| Performance benchmarks and SLAs | Ask for hard numbers: transaction latency, uptime SLA (99.99% is the benchmark), and historical migration failure rates. Vague claims about reliability aren’t enough. |
| Total cost of ownership | Look beyond the license fee. Factor in implementation costs, ongoing maintenance, and the long-term impact on your cost-to-income ratio as manual processes get automated. |
| Support and partner ecosystem | A good provider doesn’t disappear after go-live. Look for dedicated implementation support, post-launch monitoring, and a network of pre-integrated fintech partners that extend the platform’s value over time. |
Common misconceptions of core banking solutions
Several persistent myths still hold institutions back from modernization.
- “Core banking replacement means a full system rip-and-replace.” Not anymore. Progressive modernization allows banks to replace individual components (payments, lending, customer data) without touching the rest of the system.
- “Only large banks can afford modern core banking.” Cloud-native delivery and Banking-as-a-Service models have made enterprise-grade capabilities accessible to mid-sized banks, credit unions, and fintechs at scalable price points.
- “Real-time processing is a nice-to-have.” With payment rails like RTP and FedNow now setting customer expectations, batch processing is increasingly a competitive liability.
- “APIs are just for compliance.” An API-first core is what enables composable banking, launching new products in weeks by connecting best-in-class fintech modules, rather than building from scratch.
- “Migrating to a new core puts data at risk.” Modern migrations use end-to-end encryption, rigorous validation, and phased cutovers, often carrying less risk than continuing to run ageing legacy infrastructure.
- “AI in banking is still experimental.” GenAI copilots and AI underwriting are already in production at leading institutions, improving credit decisions and reducing fraud, well past the pilot stage.
The future of core banking platforms
Driven by innovation, the core banking landscape is constantly changing. Here’s a glimpse into some of the emerging technologies shaping the future of core banking platforms.
AI-powered core banking: From insights to hyper-personalization
AI and ML can revolutionize core banking by providing advanced analytics capabilities, personalized financial recommendations, automated fraud detection, and even proactive customer support.
With these technologies, institutions gain valuable insights from customer data that will enable you to deliver hyper-personalized experiences and optimize internal processes.
Explore our detailed overview of AI use cases in banking industry to learn more.
Unlocking innovation with open banking APIs
Open banking transforms how banks interact with their customers. By allowing third-party financial service providers access to their core systems through APIs, banks offer a wider range of services. Open finance leads to innovation, with new apps and financial products designed to meet specific customer needs.
This trend benefits banks, consumers, and businesses. Open banking allows for easy data sharing, simplifying tasks like account aggregation, expense tracking, and credit scoring.
Transform core banking with Neontri
Neontri supports banks with implementation and modernization work that reduces delivery risk and keeps the roadmap in the institution’s hands.
What sets Neontri apart is its track record of delivering banking-grade modernization at scale through:
- Executing 400+ fintech and banking projects over 10+ years.
- Building a PSD2/Open Banking hub used by 300+ banks.
- Delivering core offloading solutions proven at up to 10,000 requests per second.
- Co-creating IKO for PKO Bank Polski, Poland’s largest bank serving 12M+ customers.
Connect with Neontri today to explore how our tailored core banking solutions can transform your institution, improve efficiency, and enhance customer satisfaction.
FAQ
What are the typical payback periods and quantifiable ROI metrics for core banking modernization projects?
Payback periods usually range from 2 to 4 years, though cloud-native deployments can compress this to 18–24 months. The clearest indicators to track are cost-to-income ratio improvement (commonly 10–20% post-rollout), faster product launches, and fewer operational incidents as legacy dependencies are removed.
How do these solutions support future growth, such as expansion into new markets or product lines?
API-first platforms allow new geographies, currencies, or product lines (e.g., embedded lending, instant cards, or BaaS offerings) to be activated as modular extensions rather than full redevelopments. Cloud-native, multi-region infrastructure also makes it easier to meet local regulatory requirements like GDPR data residency without rearchitecting the entire stack.
How does Neontri compare to other leading core banking solution providers in terms of technology, support, and cost?
Neontri isn’t a core banking software vendor. It’s a delivery partner that helps banks implement and modernize core platforms with less risk and more control over the roadmap. Instead of pushing one product, Neontri works with the chosen core to design the architecture, integrate APIs, and build mobile channels, then supports the rollout through go-live and optimization. Its work with PKO Bank Polski, serving 12M+ customers, shows it can deliver at enterprise scale.
To what extent can Neontri’s solutions be tailored to unique regulatory, operational, or customer requirements?
Customization is core to how Neontri delivers. Solutions are shaped around each institution’s regulatory obligations (for example DORA, PSD2/PSD3, AML, and SOC 2), operational processes, and customer journeys. In practice, this includes building a Customer 360 data layer, tailoring KYC flows, or extending the Mobile Banking Framework with bank-specific features.
What is the typical timeline for a core banking system upgrade, and how can downtime be minimized?
Full core replacement generally takes 18 to 36 months, depending on complexity and integration scope. Downtime is kept to a minimum through phased cutovers, parallel system operation, and event-driven data replication, keeping old and new systems in sync throughout the transition.
To what extent can modern core banking solutions be customized to fit unique business processes or regulatory needs?
Composable, API-first platforms let institutions plug in proprietary risk models, AML engines, or Customer 360 analytics tools without touching the core itself. Regulatory requirements are handled at the integration layer, avoiding costly core-level changes.
How are security protocols maintained during and after migration, and what specific standards or certifications are supported?
During migration, data is protected through end-to-end encryption, access controls, and staged validation before each cutover. After go-live, platforms typically maintain compliance with standards such as SOC 2, ISO 27001, and GDPR, while AML monitoring and MFA remain active. The specific certifications supported will vary by provider, so it is worth verifying these during the selection process.
Sources
https://finanteq.com/blog/finanteq-solutions/what-are-users-demanding-from-mobile-apps-banking-app-features/
https://fintechmagazine.com/articles/examining-the-revolution-in-mobile-banking
https://www.sentinelone.com/blog/a-cyberwar-on-financial-institutions-why-banks-are-caught-in-the-crosshairs/
https://www.n-ix.com/personalized-banking/
