Banks around both the United States and the world are struggling with the challenge of old, inefficient IT systems that hinder data processing and product innovation. This week’s FIN News Alert looks at the American Banker article, “New Core Alternative: Runs in the Cloud, Built by a Bank,” and highlights a new banking solution — a core platform that runs entirely in the cloud. Here are the key takeaways:
- Alexander Vityaz, the head of research and development at PrivatBank (Ukraine’s largest retail bank), created the cloud-based core platform.
- PrivatBank required enormous computing capabilities to power the thousands of financial transactions conducted per day at the bank. However, the bank lacked efficiency, such as for running quarterly reports. The previous server couldn’t quickly process the huge amounts of information necessary. Additionally, it hindered quality customer service, as the bank’s systems couldn’t process data quickly enough to offer customers a real-time view of their account balances.
- In 2013, to solve ongoing issues, Vityaz — with a $3 million budget — created what is now Corezoid.
- The new platform works so well that the bank recently decided to use Corezoid, the new entity, to market the platform to U.S.-based banks.
- In addition to PrivatBank, Corezoid recently picked up its second client. Western Union is using Corezoid as the back end of its new online money transfer service in Ukraine.
- Some officials predict that U.S. banks’ hesitation to use cloud services for core functions will soon be a thing of the past.
- Other vendors aiming to sell banks on putting core processes in the cloud include Nymbus, a cloud-based core processing vendor based in Miami Beach, Fla., and Wilmington, N.C.-based nCino (which was also originally part of a bank).
- Last month, longtime financial technology vendor Misys announced that it will move its full product suite — including core systems — to the cloud.
Want to learn more about other trends in banking? Check out our infographic on banking trends for 2016.