Core banking platforms

Why it matters

The core platform is usually a bank’s largest single technology decision. It sets the product catalogue the bank can offer, how quickly it can change, which skills it needs and which vendor it depends on for the next decade or more. Core banking system architecture explains what a core does; this page covers the products.

The landscape

SBI's core banking has run on TCS BaNCS since an implementation that began in 2001; in October 2021 TCS said the partnership was extended for five years.^{1Tata Consultancy Services. SBI deepens partnership with TCS to drive innovation and enhance customer experience. As of 6 October 2021.}Finacle is developed by EdgeVerve Systems, a wholly owned subsidiary of Infosys, and marketed as Infosys Finacle.^{2EdgeVerve Systems. EdgeVerve Systems Positioned a Leader by Gartner for the Finacle Core Banking Solution. As of 31 August 2020.}The vendor states that banks in over 100 countries use Finacle to serve more than a billion consumers and 1.3 billion accounts.^{2EdgeVerve Systems. EdgeVerve Systems Positioned a Leader by Gartner for the Finacle Core Banking Solution. As of 31 August 2020.}

Deployment models

A common pattern is for a large bank to run its core on-premises, in its own data centres, with a disaster-recovery site. Some platforms are also offered hosted by the vendor or a partner, or as software as a service. Smaller banks often share a platform. IFTAS's Indian Banking Community Cloud provides core banking and other applications, such as SFMS and mobile banking, as web services.^{4Reserve Bank of India. Chief Executive Officer (CEO) for Indian Financial Technology and Allied Services (IFTAS). As of 20 September 2022.} Any arrangement where a third party runs the core brings RBIReserve Bank of India. India's central bank. It regulates banks and payment systems, runs RTGS and NEFT, and holds the accounts in which banks settle with one another.’s outsourcing rules into play: RBI issued the Master Direction on Outsourcing of Information Technology Services on 10 April 2023 (RBI/2023-24/102), effective 1 October 2023.^{5Reserve Bank of India. Master Direction on Outsourcing of Information Technology Services (RBI/2023-24/102). As of 10 April 2023.}

Database dependence

Established cores were built on large commercial relational databases, and their performance, licensing and skills needs follow from that choice. Some vendors now support open-source databases for parts of the platform. EDB stated in 2019 that multiple Finacle modules had been migrated to EDB Postgres and implemented at financial institutions in Asia.^{3EDB. Infosys Finacle Names EnterpriseDB Open Source DB Partner of the Year. As of 11 April 2019.}

How to choose

Banks usually weigh six things:

• Functional fit: the products the bank sells today and expects to sell, including Indian requirements such as priority-sector tagging, regulatory returns and connections to Indian payment rails.
• Architecture: whether the platform can run modules independently, expose APIs and cope with round-the-clock payments without long batch windows.
• Proven scale: reference customers of a similar size, checked directly rather than taken from brochures.
• Total cost: licences, hardware, database, implementation partner, upgrades and the in-house team, over ten years rather than one.
• Skills and partners: how many people in the Indian market know the platform, and how many implementation partners support it.
• Exit: how data would be extracted and moved if the relationship ended.

Trade-offs

Pitfalls

• Customising instead of configuring. Code changes to the vendor’s product make every later upgrade slower and riskier.
• Buying for the demo. A platform chosen on user-interface screens rather than on batch performance, APIs and data model disappoints later.
• Underestimating data migration, which is usually the longest and riskiest part of the programme.
• Ignoring the database bill. Database licences and specialist skills can rival the platform’s own cost.
• No exit plan, leaving the bank unable to leave even when the relationship is failing.

Questions to ask a vendor

• Which banks of our size run this version today, and can we speak to them without you present?
• How long does end of day take at our projected volumes, and what runs during it?
• Which functions are exposed as APIs, and which only through screens or files?
• How is a new product launched: configuration, scripting or code change?
• How do we extract all our data, in what format, if we leave?