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Developing a Core Banking Transformation Strategy

Throughout recent years the experts of MINDSPIRE Consulting have been involved in a number of strategic planning projects preparing the transformation of financial institutions’ account management systems.
Based on our extensive practical experience, in the first phase of the methodology, we have outlined the following recommendations regarding the development of the core banking transformation strategy.

1. Developing a Core Banking Transformation Strategy

The development of the Core banking transformation strategy is linked to the first stage of the MINDSPIRE methodology.

Based on our extensive practical CBS experience, we have developed detailed proposals regarding the creation of the core banking transformation strategy.

Developing a Core Banking Transformation Strategy

2. Preparing the core banking transformation

3. Implementing the core banking system transformation

4. Core banking system maintenance and support

The main steps of developing a Core banking transformation strategy

i.

Creating a core banking vision and strategy in line with the business environment.

ii.

Defining the IT strategy and environment related to the core banking system.

iii.

High-level timing and budget planning for the core banking system replacement project.

iv.

Compiling a realistic value proposition.

v.

Decision about the core banking system transformation and its goals.

1. Developing a strategy

Strategy creation

IT strategy and environment

Project timing & budget​

Value proposition

Decision making

2. Preparing the transformation

3. Implementation

4. Maintenance & support

Creating a core banking vision and strategy in line with the business environment

Projects aiming to replace core banking systems typically take more than five years and are accordingly quite expensive endeavors. In addition, their impact is significant on the overall organization of the financial institution involved, and during their implementation substantial resources are usually not available for other developments.

As stated above, any decision to replace the core banking system affects the bank as a whole, so it should only be made in accordance with the goals of the entire organization. Without it, it is very likely that support for the project will diminish over time. As a result, the system replacement fails or an incomplete partial solution is created that is although functional, but difficult to use and inefficient.

Our experts have been involved in many core banking system transformation projects, so they are able to identify in advance the important questions that have to be answered. We are glad to share our experience gained during performing our previous complex tasks with our clients, introducing the approaches that were successful and those also, that have caused unexpected problems.

1. Developing a strategy

Strategy creation

IT strategy and environment

Project timing & budget​

Value proposition

Decision making

2. Preparing the transformation

3. Implementation

4. Maintenance & support

Defining the IT strategy and environment related to the core banking system

Replacing a core banking system typically affects the entire IT architecture. In assessing and redesigning this, previously identified but unresolved IT strategic issues will emerge. Examples include the development or rethinking of a unified customer reference, a unified front-end, document management, or the payment architecture. In addition, the introduction, renewal, or replacement of the service-oriented architecture (SOA) or microservice REST governance also occurs in many cases.

An important expectation when defining a banking IT strategy is to create a future-proof environment that will not be obsolete in 10 years.

The digitalization projects currently running in many banks, and the urgent and mandatory projects required by regulators also have a major impact on the above elements of the architecture, so the coordination of these activities has to be addressed. If harmonization is not adequate, overlapping functions may be developed in several systems, and the synchronization and maintenance of these will be a continuous and unnecessary burden. Alternatively, some capabilities may end up not being delivered by any project.

We have reviewed many banking IT strategic plans and initiatives in recent years, and have been actively involved in the development of several such initiatives. We have significant experience with the implementation difficulties of the different approaches, which we are glad to share with our clients and thus support the identification of the right directions.

In addition, we have accumulated significant practical experience in designing the architecture of core banking systems, and based on this, we also undertake to provide methodological guidelines and experts in the development of the required environment.

Related to the above-mentioned, in many cases difficult-to-solve IT strategic issues, we are happy to provide assistance with the methodology, in choosing the practical directions, or even during the process of selecting certain architectural elements.

1. Developing a strategy

Strategy creation

IT strategy and environment

Project timing & budget​

Value proposition

Decision making

2. Preparing the transformation

3. Implementation

4. Maintenance & support

High-level timing and budget planning for the core banking system replacement project

In order to plan the timing, scope and architecture of parallel projects, it is expedient to estimate the lead time of the core banking system replacement and the expected size of the budget as accurately as possible.

In addition to prudent investment management, planning a budget for a bank account management system replacement can also be important in predicting an organization’s ability to deliver. If we plan to spend several times the previous year’s IT investments in the next 12 months, it is worth checking its feasibility in terms of resources, as well as planning the scaling up of said resources.

Based on our previous experience with high-level timing and budget planning for core banking system replacement projects, taking into account the circumstances and requirements of the particular financial institution, we can make a proposal for a high-level implementation plan. In connection with this, we can also undertake a professional review of the compiled plans.

WHY CHOOSE MINDSPIRE WHEN DEVELOPING A CORE BANKING TRANSFORMATION STRATEGY?

MINDSPIRE is capable to take on the role of a full integrator based on its knowledge about various core banking systems (e.g.: Flexcube, Transact (T24), Murex, CAMS and SMAC), its own implementation methodology and also its efficiency-enhancing tools that can handle even the most complex changes of banking systems.

Methodology title

We offer our own CBS transformation methodology tested in many core banking projects to our clients.


Our core banking transformation experts can reduce the cost of strategic planning using the methodology.

Toolset title

By using our CBS templates, core banking transformation projects can be executed more efficiently.


Our self-developed CBS related tools can reduce the risks of transformation projects.

Resources title
Our team of 80+ CBS experts has proven its ability to deliver on several occasions.


We have participated in a number of successful core banking transformation projects in Hungary and the region.

Successfully Delivered Core Banking Transformation Projects

Countries of CBS deliveries so far

Number of our Core Banking consultants

CBS related experience in man-years

1. Developing a strategy

Strategy creation

IT strategy and environment

Project timing & budget​

Value proposition

Decision making

2. Preparing the transformation

3. Implementation

4. Maintenance & support

Compiling a realistic value proposition

Banks, as economic enterprises, make their investment decisions in the light of the expected benefits and the anticipated costs and risks.

With regard to the expected benefits, it is very important to clearly identify the exact requirements for the new core banking system, and this focus should be maintained throughout the program over the years.

It is natural that the goals change somewhat during the project, and it is also very important that the achievable endpoints are defined at all times. This is showing the direction for the experts in the numerous professional tasks of the diversified project, which speeds up the implementation and thus reduces the costs. In addition, clear goals and expectations effectively support the motivation of the organization and the management as well.

Our company, MINDSPIRE Consulting, supports the compilation of a realistic value proposition by helping to identify and continuously represent the important questions, without which the implementation of the project cannot be solved efficiently and successfully.

In our view, considering the costs, lead times, and risks of the core banking system transformation, such a project should only be initiated if the responses to all possible questions clearly supports the necessity of the endeavor.

1. Developing a strategy

Strategy creation

IT strategy and environment

Project timing & budget​

Value proposition

Decision making

2. Preparing the transformation

3. Implementation

4. Maintenance & support

Decision about the core banking system transformation and its goals

The transformation of the bank account management system imposes a significant financial burden on the organization, and during its lengthy lead time, it burdens internal resources to such an extent that usually other significant implementations cannot be executed in parallel. It is therefore critical to have a full agreement in the top management of the bank about the core banking system transformation, its goals and expected benefits.

It is also worth confirming this with a formal decision, which must be clearly communicated to the organization, the owners and other stakeholders.

Our experts act as facilitators to support employees of the bank during the negotiations and decision making about the goals. In addition, they assist in compiling the management decision-making material as required.

In our opinion, the final decision on the core banking system transformation and its goals has to be made by the organization, so our role lasts until the preparation of decision-support material.

More information is available about the selection of CBS systems in our related post.

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