The Role of Multicore Approach in Banks Digital Transformation

Although digital transformation is high risk, Southeast Asian banks recognize the value of digital core banking

FREMONT, CA: According to new research from IDC Financial Insights, Leveraging Digital Core Banking Systems: Next-Level Banking, January 2022, they expect digital transformation as high risk while Southeast Asian banks recognize the value of digital core banking, and are looking for a lower-risk approach to extend the life of their legacy technology and mitigate potential damage. The new IDC white paper, sponsored by SaaS cloud banking platform Mambu, contains information gleaned from interviews with a number of Southeast Asian banking executives about how they see the future of core banking within their organizations and how they plan to take advantage of the opportunities that digital banking can provide.

The primary difficulty for established banks in Southeast Asia, many of which have core banking systems that are over 20 years old, according to the report, is to deliver on the promise of digital transformation without depleting financial resources or jeopardizing their reputation. The multicore banking paradigm, coined by IDC as a solution to this problem, allows institutions to gradually implement digital core banking while reducing financial, technological, and reputational risks.

According to IDC Financial Insights adjunct CIO Steve Shipley, the study for this white paper uncovered several recurring themes from interviewees, including how risk averse Southeast Asian banks are and how important old core banking technology is to them. However, banks in the Asia-Pacific (Apac) region are also embracing digital transformation, employing a new banking model – multicore – that will enable effective and lower-risk transformation into future-ready digital banks, he said in a statement released on 18 January, 2022, in Singapore.

According to Mambu managing director Apac Myles Bertrand, historically, integrating several core banking systems was seen to be prohibitively expensive and complicated, thus banks would undertake big bang or rip-and-replace core banking projects, which were very hazardous and frequently failed. However, in today's market, digital core banking built on robust orchestration frameworks, microservices, and APIs can now make it easier to integrate different core systems, lowering the risk of traditional core being replaced and extending its value over time.