28 April 2023

Delivering next generation core banking

The label next generation core banking is often applied to a wide range of core banking solutions, using an array of tech approaches, whether they are genuinely next generation or not. But surely to be next generation, core banking must be built natively in the cloud (not simply moved there) with technology designed to leverage the many benefits that the cloud brings, scalability, speed and improved security – as well as the reduction in carbon footprint brought by cloud. 

Unified product hub – no more costly modules

Next generation core banking must also arm financial institutions with the functionality to build a wide range of products using a broad range of product features through a central product hub that enables them to innovate in and across product types.  More traditional approaches require purchase of separate product modules for different types of products such as lending or savings, and all the cost and integration that entails.

A next generation core must also serve as the hub of a wider tech eco-system designed to integrate across a wide range of products to build a unique offering through selection of best of breed providers for KYC, loan origination, card services, digital experience etc. For all of these things to work together to create a market leading customer experience, the core technology needs to be efficient, ultimately scalable, facilitate seamless integration with the rest of the ecosystem and architected to maximise speed and security of data processing.

Doing data differently

SaaScada was the first core banking solution to combine Command Query Responsibility Segregation (CQRS) and event sourcing architecture to deliver genuine next generation core banking.

CQRS is an architectural pattern that separates the responsibility for handling commands (write operations e.g., new account transactions) and queries (read operations e.g., get transaction history) into separate components. By doing so, CQRS can provide significant scale benefits when unlocking real-time data insights.

One of the key benefits of CQRS is that it enables the use of different database technologies for read and write processes to enable a combined level of performance and data integrity that is not possible with traditional relational database architecture.  At SaaScada we have built our core banking engine using a combination of cloud-native noSQL databases and traditional SQL-based technology to get the best of both worlds; high performance and consistent writing of transactions with the ability to query them in a flexible and performant manner.

Separation of read and write operations through CQRS significantly reduces the database contention that plagues legacy core banking systems.  Read and write components can be scaled independently to improve overall system performance making scenarios such as data migration and spikes in growth easier to manage. Our customers can therefore analyse customer data in real-time without having to worry about impacting the performance and throughput of new transactions.

Combining CQRS with Event Sourcing provides even greater benefits for unlocking real-time data insights. Event sourcing involves capturing all changes to the core banking engines state  as a series of immutable events. By doing so, our customers benefit from a complete audit history of data changes and greater precision/traceability when analysing transactions. The event-driven nature of the platform allows customers to consume changes in application state in real-time, unlocking the ability to trigger business processes immediately with full operational context rather than relying on inefficient nightly batch processing. This not only reduces overall operating costs but also helps reduce carbon footprint.  

Harnessing the power of data

Our approach has enabled our customers to utilise event streams in a multitude of ways – some require pre-defined reports to be provided to eco-system partners, some take feeds from our webhooks to create their own reporting and feed other systems, many combine the best of both and others take a full copy of data periodically into their own systems to feed MI or customer reporting requirements.  For existing banks, this flexibility is particularly helpful where multiple underlying technologies are being used during a period of transition, where we have been brought into provide fast and efficient product innovation alongside the BAU of existing products.  For challengers building from the ground up, the ability to access data quickly and easily is key collaboration with the wider eco-system, gaining customer insight and building MI to inform propositional development.

Looking past the labels

For financial institutions that are looking keep up with the increasing pace of innovation or, better yet, lead the market, choosing the right core banking technology is key. This is why it is so important to look past the labels and ensure that in addition to the cross-product functionality and integrations you expect from next generation banking, the underlying data approach will provide the agility and data insights that you need to ensure your brand is a market innovator.

More on this topic: Watch our Doing things differently video where our CEO, Nelson Wootton, explains the key differences in the way SaaScada’s technology has been built to enable real time customer insight and deliver innovation.

Jody Roblin

Jody Roblin

Chief Marketing Officer

Jody has over 25 years’ experience in financial services and fintech marketing in Australia and the United Kingdom.

Jody has delivered success for both start-ups and scale-ups, with a keen focus on customer outcomes and sustainability.

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