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What is a core banking software technology?

Find out how the core banking solution for neobanks works. Get into the specifics of banking engine and its functional modules. We explain it in short informative answers to frequently asked questions.

What is core banking technology?

Core banking technology is usually the stack of solutions you build main retail banking services on. They provide services for opening credit and debit cards, conducting operations and transactions, etc. Due to digitalization, customers have been able to work with the bank online without leaving their homes.

Core banking technology is evolving in two ways. On the one hand, the system is regulated by protocols and standards, and on the other hand, the competition of development companies. Each company tries to make its product unique and contributes to the development of core banking technology. The modern banking system requires the system to be a non-legacy monolith, because changing the neobank system will require a complete shutdown of the system and it will be necessary to completely rewrite the code, which greatly complicates the work process and stops your earnings, and the possible occurrence of errors in the entire system also increases.

How do these technologies work in modern neobank solutions? Watch the demo of our software product.

Why upgrade the core banking system?

Systems that have not been updated for a long time do not have the opportunity to develop in the way that modern banking systems do. Many companies prefer to change their online banking software, as this allows them to introduce new functionality without fixing bugs. If you have an outdated core banking system software, you cannot use the 3rd party integration module, since the introduction of modern additional functions will contribute to the appearance of a large number of errors. Old systems are written in programming languages ​​that are no longer in use. Next-gen systems and modules are written in new programming languages. Their combination causes a conflict in the system and the appearance of a large number of bugs. Modern banking software source code also has a better security system with improved protocols and encryption. Your up-to-date core banking system allows you to work without interruption even under a huge number of transactions and operations per second.

Find out about the diversified modular banking core created by SDK.finance for neobank.

What is a core banking engine?

Core banking engine is the heart of the banking product architecture . It includes the basic functions of the banking system, such as carrying out a large number of operations and transactions per second and logging them. Core banking engine works together with other system modules that are responsible for the security of transactions, work in the CRM system, setting up automatic payments, etc. Security and encryption protocols allow you to protect all transactions from third-party access. It is necessary that the core banking engine is located on servers that comply with the recommendations for the system to run smoothly. Core banking engine helps to create a truly flexible system that allows you to make any banking software (digital bank software, digital wallet software, core banking software). You get the opportunity to upgrade your product as required by your business. Your development team can change core features in the system and also add third-party features to create a diverse ecosystem.

How will your core banking engine work? Watch our demo for the fully functional neobank core.

What is required for the core banking system?

Core banking system is a complex system that consists of certain modules. Since this is a multi-component system, different programming languages ​​and frameworks are used, in connection with this, it is necessary to recruit the correct number of programmers for certain languages. Banking core software requires proper core deployment and data migration. As a rule, after purchasing a product, the developer company advises which staff of programmers is best to hire and the number of people, explains in detail how the system works and how it can be upgraded. One of the main recommendations is to meet all the requirements of hardware that supports reliable and high-load solutions so that the performance of the entire infrastructure does not fail. You need 3 servers for the core banking system to function properly:

  • Development server (for program development and testing)
  • Production instance (to carry out  operations and transactions in the banking system and work with real clients)
  • Sandbox server (This is a platform with the same specs as a server for the main business. It is used to fix bugs related to the integration of new features)

You should have two instances of the infrastructure to get the system up and running under heavy loads. Your developers will use one variant to compile and develop the system, and the second variant will be for working with real clients and operations, transactions. 

You can see the minimum requirements for instances on the SDK.finance website.

Which company developed core banking software?

It is not clear which company was the first to invent core banking software.Therefore, it is worth mentioning the two main companies that call themselves creators. Sopra claims to be the first company to develop the core banking system in 1974. Sopra was founded by Pierre Pasquier, François Odin and Léo Gantelet in 1968 in Annecy, France. In 1971, Sopra signed the first major agreement, which led to the creation of the first banking platform. Sopra and Steria announced a merger in 2014 to become a leader in computer technology. The main work of this company is consulting, IT services and software development. However, other sources claim that Temenos was one of the first companies to get into core banking software. The company was founded by George Koukis and Kim Goodall in Geneva, Switzerland in 1993 through the acquisition of the rights to GLOBUS, which was a successful banking software platform. The company was renamed Temenos. Since then, companies have been competing in attempts to attract customers to their side, and this contributes to the development of technologies in the banking core system. Each company is trying to improve its system, eliminate errors, increase the limit on the number of transactions and operations, introduce some new functions, and secure the system of transactions and operations using the security protocols and encryption system.

SDK.finance develops retail neobank cores. Find out what functions and potential our core banking software solution has.

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