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An innovative go-to-market strategy for core banking

An innovative go-to-market strategy for core banking is required for banks to increase returns.

Overview

Revamping a core banking platform is an expensive proposition. To increase returns, banks must think out of the box and create innovative go-to-market strategies for core banking. One such possibility is for banks to market their new core banking platform as a "white label" service or utility to other financial institutions that cannot justify the expense of overhauling their own platforms.

Banks are realizing that core banking functions, such as transaction processing, no longer provides a competitive edge. Institutions that choose to outsource these functions will have the freedom to innovate to differentiate.

But, speed matters. Banks planning to move into this area will face stiff competition from other nonbanks, particularly core banking software providers. These providers could build capabilities around their core banking software to offer a robust “white label” service. Thus, first movers will have a decided advantage.

Learn more about Accenture Banking

Background

Core banking as a service has existed in the marketplace for some time, albeit on a small scale. For instance, back-office technology and product processing as a service are not new concepts for banks. Many banks offer retail brokerage services powered by the securities clearing and settlement operations of other banks. Many independent investment advisors consider planning and advice as their core competency. Thus, they have no qualms in selling investment products “manufactured or serviced” on other institutions’ investment platforms.

Accenture believes that the time is ripe for “core banking as a utility” to take on a more prominent role. Key reasons behind this change include:

  • Shift in the overall economies of the banking environment.
  • High investments involved in revamping a core banking platform.

Recommendations

Investments needed to support a nimble operating model within an institution are similar to those necessary for a white label or a utility service. These investments should be aimed at:

  • Simplifying core banking to allow for more granular services and real-time processing.
  • Offering a flexible platform to better orchestrate process layers and deliver product personalization.
  • Achieving efficiency through end-to-end digitization.
  • Boosting revenue with real-time analytical models and by integrating with third-party products.