What is a core banking system?
A core banking system is the central software that runs a bank’s everyday operations: opening accounts, processing deposits and withdrawals, handling transactions, and managing loans. It is the engine room every other banking service plugs into.
The central software that runs a bank’s everyday operations; every other banking service plugs into it.
The mobile app, the website and the branch terminal all sit on top of it.
Get it right and every channel above it gets faster and more flexible.
Under 12 CFR 370.3, a covered institution’s IT system must be able to calculate deposit insurance coverage within 24 hours of the FDIC being appointed receiver.
In this guide
What it runs
- Opening accounts
- Processing deposits and withdrawals
- Handling transactions
- Managing loans
The core and the channels
When you check a balance, move money, or open an account, the core banking system is what actually records it. Everything else, the mobile app, the website, the branch terminal, is a window onto this core.
Figure 1. The core and the channels that sit on it
Restates this post: when you check a balance, move money or open an account, the core records it, and the mobile app, the website and the branch terminal are windows onto it.
Modernizing the core
Because it is so central, modernizing it is one of the hardest and highest stakes projects a bank takes on. Get it right and every channel above it gets faster and more flexible.
Sthenos builds banking software around the core, including an internal web portal for a public sector bank and a relationship manager app for a banking institution.
Related terms
Why is replacing a core banking system so difficult?
It touches every account and transaction, so the change has to be flawless and continuous. There is no easy off switch.
Related services: fintech software development; financial IT services; PCI-compliant software development.
