What’s the best core banking software company in 2023?
The increasing customer demand for advanced banking technologies from a single platform has fueled the ubiquitous shift in core banking software market size. Indeed, it is forecasted to expand at a compound annual growth rate (CAGR) of 9.3% from 2023 to 2030 and consolidate its position as a catalyst for growth.
The core banking software companies play a pivotal role in providing market players with many growth opportunities. Those leveraging core banking software are gaining market share, prompting traditional banks to reassess their outdated platforms and entirely migrate from legacy systems. Whether you are a bank aiming to modernize your infrastructure or a fintech startup venturing into the neobank realm, core banking software companies have numerous innovative solutions that will help you along the way.
What are these top companies in 2023, and what can they offer to your business? In this article, we'll highlight the established core banking software platforms, their unique offerings, features, strengths, and market positioning that make them stand out.
What is core banking?
Core banking is the back-end platform used to deliver fundamental banking functions and processes that lie at the heart of a financial institution's operations. Core banking systems serve as the central hub of networked bank branches for managing customer accounts, processing transactions, handling deposits and withdrawals, giving loans and mortgages, and other related services.
In brief, core banking software companies provide customizable and configurable software solutions with secure and compliant features, system integration, regular updates, and ongoing technical support. Such platforms help to seamlessly integrate their software solutions with other existing banking systems, such as payment gateways, CRM systems, and risk management platforms.
What are core banking software types?
There are different types of core banking software, each designed to cater to the specific needs and requirements of financial institutions.
- Retail Core Banking Software: This type of software is mainly used by retail banks and focuses on handling retail banking operations, such as savings and current accounts, deposits, loans, payments, and transaction processing. However, commercial banks, universal banks, community banks, and credit unions also utilize the core banking technology to keep up with innovation.
- Corporate Core Banking Software: tailored to clients of all sizes, corporate banking software empowers corporate banks to provide top-notch financial services to enterprise clients by addressing trade finance, cash management, lending, syndication, payments, origination, limits, collaterals, treasury operations, deposits, liquidity management, online banking, and mobile banking.
- Universal Core Banking Software: Universal core banking system encompasses the functionalities of both retail and corporate core banking software to provide a versatile platform for financial institutions.
- Islamic Banking Software: Islamic banking software serves to develop Shariah-compliant banking products that meet specific local and regional needs. Islamic Core Banking platform supports Islamic investments, deposits, trade finance, Global Pool per currency, DAT Islamic Restreint (Wakala), Islamic treasury, and capital markets.
- Private Banking Software: Private banking software is specifically tailored to meet the unique requirements of private banks and wealth management firms. This advanced solution is designed to streamline operations and cater to the needs of high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs). It enables efficient management of client relationships, portfolio tracking, investment advisory services, wealth planning, and other essential functions associated with private banking.
- Online Banking Software: Online banking software facilitates the management of various digital banking services, including retail, corporate, and private banking. It empowers organizations to effectively manage digital wallets, streamline customer onboarding processes, offer real-time support, and implement market segmentation strategies, among other essential functionalities.
- Microfinance Software: Microfinance software is designed for microfinance institutions (MFIs) with limited resources and few avenues for economic growth. MFIs provide poor minorities and underserved populations with essential small-scale financial services, including microloans, savings accounts, and financial literacy programs.
Depending on the business strategy of financial institutions, different software types can be merged to deliver maximum functionality and innovation.
What are the most common types of core banking software based on IT infrastructure?
There are several types of infrastructure that financial institutions usually opt for. Some of them are:
- On-premise/core: On-premise/core infrastructure is a traditional model of hardware and software run within the premises of an organization, typically within their own data centers or bank's server rooms.
- Cloud-based: In this model, the software is hosted on the cloud of a third-party service provider. An organization can access it over the Internet.
- Hybrid: In this model, the software is installed on-premise, but some of its components are hosted on the cloud. This model offers the best of both worlds, providing agility and security.
- Subscription-Based: This model provides software-as-a-service (SaaS), where banks pay a subscription fee to use the software on the cloud. This model is cost-effective for small and medium-sized banks that cannot afford a large upfront investment in hardware and software. With this model, banks can access leverage software-as-a-service (SaaS) by paying a subscription fee for its usage. The subscription-based model offers a cost-effective alternative, particularly beneficial for small and medium-sized banks that may not have the resources for a significant upfront investment in hardware and software. Whereas, for large-scale banks exploring new business models or entering new markets, this model provides notable advantages in terms of speed and agility.
What to look at in the core banking software?
To identify the top-tier option in the market, it's essential to evaluate the core banking solutions in their broader characteristics. The complete checklist of criteria must include the following:
- functionality and agility
- enterprise-wide scalability framework
- security protocols and credentials
- integration capabilities
- built-in compliance tools
- user experience
- support and maintenance
- technology stack
- customization options
- API integration
- track record
Assessing these aspects ensures that the chosen software meets the specific requirements, performs reliably, and aligns with industry regulation standards, ultimately leading to a successful implementation and efficient banking operations.
Top 5 Core Banking Software Providers
From multi-currency accounts, currency exchange, and instant SEPA & SEPA credit transfers to card issuing and virtual IBAN integration, Crassula enables businesses to innovate and scale new heights.
Finastra offers a comprehensive set of integrated, end-to-end solutions that are leveraged by financial institutions globally. Its cloud-enabled software encompasses a wide range of banking operations, ranging from retail and transaction banking to lending, treasury, and capital markets.
Mambu empowers financial institutions with a composable platform, helping them to design, test, and scale banking and lending solutions with unparalleled flexibility and speed. As a SaaS provider, Mambu delivers its services through a subscription-based pricing model, which allows businesses to scale up or down according to their needs. With a modern API-first architecture, Mambu ensures that its clients can seamlessly integrate third-party applications and services, making it a favorite among neobanks and fintech startups.
With over 25 years of experience in the banking sector, Temenos has positioned itself as a market leader in providing mission-critical software to financial institutions. With its advanced data analytics, AI-driven insights, and a range of end-to-end digital solutions, Temenos caters to universal, retail, corporate, treasury, wealth, and private banking needs.
Finacle, an offering from Infosys, is a comprehensive suite of integrated banking software solutions. It includes core banking, e-banking, mobile banking, CRM, payments, treasury, origination, liquidity management, Islamic banking, and wealth management. With a presence in 100+ countries and serving over 1 billion end customers, Finacle has a solid track record of driving innovation and growth for banks of all sizes, from small credit unions to the world's largest financial institutions.
Having taken the FinTech world by storm, core banking software companies remain the market's most crucial growth element for the next-generation companies. Indeed, core banking systems allow to embrace automation and eliminate outdated manual processes that hinder the banks' efficiency and contribute to costly mistakes.
However, thanks to the multi-faceted software application-based platforms, banks can expand their outreach to remote places and maintain a competitive edge in the ever-evolving digital landscape. The top software companies, such as Crassula, Finastra, Mambu, Temenos, or Finacle, are there to provide assistance.