Transitioning to a new core banking system is more than just a technical upgrade for the financial institution – it’s an opportunity to drive innovation, enhance operational efficiency, and meet evolving compliance demands.
To gain deeper insights, we spoke with Martin Della Chiesa Co-CEO of Skaleet, a leading core banking solutions provider, about the intricacies of these transitions.
He shared his expertise on aligning core banking and AML/CFT systems, emphasizing how an integrated approach can streamline operations, accelerate time-to-market, and ensure seamless compliance, particularly when paired with solutions like AMLYZE.
Let’s start the interview with our first question, what are the most common technical and operational challenges that you hear about from financial institutions when they migrate their core banking platform?
Martin: Migrating a core banking system is a multi-faceted challenge. It’s a strategic challenge because the opportunity exists to define a new ecosystem of third parties to be integrated into the core banking system (such as an AML/CFT provider, an identity verification provider or even a payment service provider) and to focus on what brings value to the end user (hosting and maintenance of the core banking system being on provider’s side).
It’s also an operational challenge due to the impact on the organizational structure and the ability of IT and business teams to adopt the solution. (for example, change enablement projects to be carried out by the financial institution).
Last but not least, the most common technical challenges are the development and maintenance of connectors to integrate third parties and data migration, which must be considered as a project within the core banking migration project with its own planning, governance and follow up.
What about people related issues?
Martin: Great question. Operationally, this is also critical and requires getting management and stakeholders on board with the process and effectively communicating the transition plan. Training employees on the new solution, maintaining business continuity and managing customer expectations are also major operational hurdles that should be anticipated. Skaleet’s Onboarding project approach combines key factors enabling the success of the project such as the co-construction of a product functional scope to go live, continuous delivery of new versions through agile methodology, a dedicated recorded training plan and a close relationship with third parties like integrators and consulting firms that allow our clients to benefit from our common experiences in these kind of projects.
Every financial institution is different and unique. How do you standardize the process of a core banking platform change with this in mind?
Martin: Adapting to specific institutional needs can really complicate the process. With this in mind, Skaleet’s approach is based on a highly configurable approach to reduce the impact of technology constraints. Customers typically combine best-of-breed solutions with off-the-shelf parameterization-based modules. We can provide our own Skaleet process automation tool to orchestrate processes or integrate with third-party applications. The use of no-code and low-code solutions can reduce application development time by up to 90%, enabling financial institutions to release new products and services with time-to-market measured in weeks. Skaleet promotes an “adopt vs. adapt” mindset and executes an onboarding playbook based on its experience driving core banking transitions.
Can you identify any useful risk management strategies that can be employed during this process?
Martin: Our approach is not just about building great products. We also focus on the ecosystem, building end-to-end solutions that optimize time-to-market and de-risk execution. Leveraging pre-built integrations with specialized partners using API connectivity helps financial institutions drive project execution with clarity, speed and confidence. Having prebuilt technical integrations with partners like AMLYZE also adds value by simplifying the process.
In your opinion, is it strategically a good time to consider changing AML software providers during a core banking system overhaul?
Martin: As AML/CFT risks continue to evolve and regulatory scrutiny to increase, it is important to have a solution that is ready to address these challenges. A solution with an integrated AML application that is always up-to-date and able to address threats as they arise results in a more secure, cohesive and streamlined system while reducing future connectivity challenges. By integrating our core banking platform with AMLYZE, financial institutions can effectively mitigate risks through enhanced transaction monitoring and screening, risk scoring and case management.
The simultaneous modification of both systems also allows for a more streamlined data migration process. This makes it strategically advantageous to consider changing AML software providers during a core banking system overhaul, especially if the new provider offers significant technical and business benefits. We can highlight technical aspects such as the availability of a pre-built connector, such as AMLYZE’s integration with Skaleet, which reduces integration risks and accelerates the implementation timeline by making it easier to synchronize both systems.
Full automation of transaction screening increases operational efficiency, reduces manual workload and ensures consistent compliance monitoring, which is critical during system transitions.
How does an integrated approach to transitioning both systems improve compliance and operational efficiency?
Martin: An integrated approach to AML and core banking platform migration ensures consistency of information, resulting in a high quality of service and efficient processes that enable faster identification and resolution of issues and improved customer service. Implementing both systems simultaneously can reduce overall project costs, including those associated with training, project management, and vendor negotiations. The business benefits of aligning the AML software upgrade with the core system overhaul can streamline the rollout and reduce the overall time to market. Ease of use is also critical. A seamless AML system that requires minimal manual intervention or development resources supports a smoother transition and faster user adoption. A solution that meets compliance requirements out-of-the-box, without additional development, helps avoid regulatory risk and ensures a smoother transition during the overhaul.
What are the typical steps involved in changing a core banking system?
Martin: Transforming a core banking system involves a series of internal and external steps. Internally, the process begins with establishing a new transformation project and forming a cross-functional project team. It’s important to identify the key drivers for change, such as outdated technology, lack of support for legacy products, high maintenance costs, compliance requirements and other operational pain points. Migration requirements are then outlined, followed by evaluation and validation of the minimum viable product (MVP) and go-live dates. A clear Request for Information (RFI) or Request for Proposal (RFP) is created with defined requirements and use cases. Decisions are also made about deployment models and whether to go with an internal solution, hybrid model or external vendor solution.
Thanks for the interview!
You can find out more about our selection of the best core banking systems in another blog post here.
