Core Transformation Happens One Product At a Time

With all the “neo” and challenger banks promising the speed and efficiency of smartphone banking, traditional FIs now more than ever feel the pressure to reinvent their antiquated systems.

Transforming the banking core is possibly the costliest and the riskiest undertaking for any financial institution. To reduce this risk, banks should take a product by product approach to transformation, according to Eugene Danilkis, CEO of the SaaS banking platform Mambu.

“The entire process of transformation can last for years, and cost millions of dollars. The executive who initiated the process may not even be with the company long enough to see any results,” he told Bank Innovation. “With those kinds of costs you can imagine why everyone is reluctant at first, and why banks may choose to start with one product.”

Consumer-facing products, such as deposits or small lending products, are best-positioned to start with. “These high volume products are expensive to run on legacy core banking systems.  They are much more profitable and efficient when supported by lean core banking engines, and can be migrated with little to no operational risk,” Danilkis added.

Berlin-based Mambu has just launched its operations in the U.S., establishing an office in Miami last month, to address “the growing demand” in the U.S. market, according to the CEO.

“There is a pressure to innovate, and banks feel it, so looking at this process product by product makes it a more digestible project for them,” Danilkis said. “12-month projects will generate quicker results and help build a long-term strategy, rather than attempting to start with a masterplan.” Moving some parts of the business away from a bank’s legacy systems, will eventually “move all products and clients into a new architecture,” he explained.

Mambu currently has offices in Miami, Singapore, and Europe.