How your core banking system is holding you back

By December 6, 2019Banking Systems

Core systems are the backbone of the banking industry, as most banks simply couldn’t function without them. But as many bankers know, these systems are not without their flaws. When it comes to lending, core systems were largely designed for servicing activities, not for credit administration, portfolio management or other fundamental lending functions. Additionally, core systems are often difficult to use and lack the architecture to make data easily accessible. Ultimately, these deficiencies in your core mean your bank likely isn’t as efficient or as profitable as it could be. Here are just some of the ways your core system may be holding you back, and what you can do to improve operational efficiency at your bank.

Lack of visibility for credit administrators

Credit administrators are on the frontlines in protecting your bank against risk. But in order to do their jobs efficiently and effectively, they need strong visibility into loan data. Unfortunately, core banking systems weren’t designed for this purpose, and as such, the data that credit administrators need can be spread out across your organization’s digital landscape. Credit administrators may have to access multiple systems and navigate multiple core system screens to gather all the information they need. This slows down their processes and ultimately means they’re less productive than they could be.

But there’s perhaps a bigger concern. When credit administrators can’t easily see all loan information, they’re more likely to miss early warning signs of bad loans. This increases risk for your entire organization.

Hidden information for executives

For bank leadership to make smart decisions that will affect the future of the bank, they need strong visibility into their portfolios. But this is often easier said than done. Core systems are notoriously difficult to use, especially for those that are not working in the system on a daily basis. Because of this, it’s rare for senior executives to utilize the core to access information. Furthermore, in most banks, critical information is trapped within silos outside of the core, which can make it extremely difficult to assemble the types of reports executives need. In some cases, it can take days to compile reports, with employees spending a significant portion of their time just tracking down data. In situations like these, you’re not only experiencing delays, you’re wasting resources.

Bad UX slows productivity, creates frustration

Ask any frontline bank employee and they’ll likely tell you: core banking systems are difficult to use. Some of the most commonly used systems were originally built more than thirty years ago, and although they’ve been updated over the years, the updates are akin to throwing a new coat of paint on a 100-year-old house. It may technically be an improvement, but the underlying outdated architecture is still going to cause problems.

In short, most core banking systems simply weren’t designed with modern user experience or “UX” best practices. This means it takes longer for your employees to complete routine tasks, reducing your overall efficiency. Unintuitive systems can also lead to frustration for team members that may ultimately prove costly to your bank.

It’s safe to assume that the systems bankers use every day will have some bearing on their attitude toward their job. If the software is difficult and frustrating, they’ll be frustrated with their job as a whole and may be more likely to look for work elsewhere. Providing more intuitive, easier-to-use systems can increase job satisfaction and decrease turnover, saving your bank money.

Too many spreadsheets

What do you get when you combine poor system UX with cumbersome data silos? Spreadsheets.

For years, bankers have been using spreadsheets as a workaround to make up for deficiencies in their core systems. It’s not uncommon to see spreadsheets being used for foundational activities such as covenant trackingloan portfolio management, reporting and more. But while spreadsheets may offer temporary solutions, they also present new problems.

Spreadsheets aren’t dynamic and don’t connect directly to the core system, meaning the information they contain may not be complete or current. There’s no audit control to track changes, there can be formula errors, and they don’t serve as the single source of truth for your operation. And of course, spreadsheets can be easily deleted or corrupted, putting valuable company data at risk.

But perhaps the biggest danger is that executives could be making business decisions based on inaccurate information caused by copy/paste errors, bad formulas, or other problems common to spreadsheets. If your bank is relying heavily on spreadsheets, it may be a sign that you need to invest in an additional layer of functionality for your core system.

Disruptive FDIC audits

As unpleasant as they may be, FDIC audits are a necessary part of the banking industry. The process can be disruptive, and most bankers want audits finished as quickly as possible. But once again, your core system may be holding you back. That’s because the same issues that hamper efficiency for your employees can also create headaches for FDIC examiners.

Regulators typically ask to see a wide variety of information, particularly when reviewing your loan portfolio. But if you can’t quickly retrieve the information they need because of data silos and difficulty using your core, examiners will, by necessity, be in your offices longer. This creates additional disruption to your normal operations.

How to improve your banking operations

Now that we’ve outlined some of the problems with core banking systems, it’s time to talk solutions. Because core systems are so integrated into every aspect of your banking operations, we know they’re here to stay. But by overlaying the core with a more modern solution, you can hide many of the most frustrating aspects of your core.

Consider a solution like BankPoint that can help optimize processes throughout your entire banking operation. BankPoint is an intuitive platform that enhances your core system and provides a single point of entry for all loans, customers, deposits, documents and more. The enhanced user experience will improve productivity and can contribute to a culture change among your employees.

By addressing all areas of your banking processes, a powerful solution like BankPoint can help:

  • Improve efficiency for all employees by making key data more accessible
  • Streamline operations with easy-to-use workflows
  • Increase productivity and improve employee job satisfaction with a beautiful user experience
  • Eliminate spreadsheets and create a single source of truth throughout your organization
  • Reduce the time it takes for FDIC investigators to complete exams

Core banking systems are supposed to automate banks. But in reality, many banks are still managing operations in a very manual way. From problematic spreadsheets to the time it takes to produce actionable reports, the negative effects of aging core systems are likely evident throughout your organization.

To streamline operations, you need better technology. By implementing solutions like BankPoint, you can improve efficiency for both leadership and frontline employees, while reducing risk, increasing employee satisfaction, and ultimately improving profitability for your bank.

Want to get more from your core banking system? Contact BankPoint today to schedule a demo of our powerful bank management solution.