What are the main risks that should be considered when selecting a core banking solution?
There are several important criteria for the selection of any type of solution and provider; Some of the most important risks that Financial Institutions should evaluate are:
Supplier Risk
This risk has been classified by various consultants as the main aspect in the selection of a business system.
The viability of the supplier can be evaluated based on the agility of the supplier to generate significant and sustained income and profits.
Only those suppliers with great long-term viability will be able to respond to the growing needs of their customers. Some of the questions that your Financial Institution should ask are:
- Is the provider financially viable?
- Is the provider engaged?
- What are the quality standards of the supplier?
- What do others say about the provider? the company in
- Does the company have a defined product roadmap?
- What is the ability of the company to innovate the product?
- Will we receive the source code?
Solution Risk
It is critical for the Financial Institution to understand and evaluate the type and level of coverage of the functionality provided by the core banking solution. Such evaluation must also consider the requirements of the Financial Institution in contrast to the functionality of the solution. An analysis of the minimum capacities required for the solution and its ability to provide added value that allows the Financial Institution to differentiate in the market must be included.
Technological Risk
Financial Institutions are focusing on IT expenses to ensure that any investment has a specific impact on the business, in terms of generating additional revenue for the Financial Institution or reducing costs.
Implementation Risk
The implementation determines how effective the core banking solution will be. Financial Institutions are increasingly tending to focus on the customer and not on the product, and emphasizing the provision of a differentiated service. To achieve this, it is important that the solution allows a great capacity for customization. The Financial Institution should evaluate this aspect by analyzing implementations in similar institutions.
Risk of Continuous Support
The success of the implementation also depends on subsequent support and continuous improvement of the solution.
Although there are apparently several core banking solutions that meet the requirements of the Financial Institution, a deeper analysis will show that there may be a significant difference in the ability of each provider to respond to the needs of financial institutions.
It is important for each Financial Institution to carefully develop a selection criterion based on their requirements and use it to evaluate the characteristics and capabilities of each solution.
