Choosing the wrong core banking system can have a profound negative impact on your financial institution’s long-term growth by failing to provide you with the kind of services you really need to help you scale your business.
Escalating costs
An advanced core banking or loan management system is expected to make your business processes swifter and more efficient, to remove the pressure of maintaining your own server infrastructure, and ultimately leave you more time to concentrate on your core business. It’s a smart investment for a rapidly growing financial institution.
But what if your provider doesn’t do that? The danger of opting for a cheaper core banking system is that, to cut costs, they also cut back on certain services.
They may, for instance, only maintain a limited server capacity, meaning your business’s potential growth will be constrained by the ceiling imposed upon it by the provider.
This means you may be forced to pay either for cloud hosting or physical server infrastructure, with all the accompanying updates and maintenance. It’s an enormous drain that requires employing specialists to perform this additional work. The costs will, consequently, simply keep escalating.
Lack of extensibility
Extensibility – the ability to configure a core banking system to a business’s needs without requiring any coding – is one of the major features of Oradian’s core banking system, but inexpensive systems will often only permit an extremely limited degree of configurability.
This may be because their system is simply not designed to allow integrations or configurations, or because doing so requires a level of coding ability many financial institutions lack.
The consequence is that firms are forced into additional expenditure in order to integrate business-critical third-party applications they’ve been using for years, or to employ developers or pay the provider extra to introduce new functions.
We’ve heard from firms that have used inexpensive systems in the past, that were nevertheless obliged to pay a hefty price for additional integrations just to get the level of service they anticipated straight out of the box. The impact of this on the bottom line can be staggering.
Insufficient implementation and customer support
One of the reasons all these problems arise is that many cheaper providers simply don’t offer enough support during or after the implementation process. Some will simply take your money and leave you to it, providing only the bare minimum of assistance getting your new system up and running.
Others, in a bid to cut costs, won’t host support teams in your market, leaving you to deal with specialists who simply don’t understand the nuances of your home country and are consequently less invested in your growth and success.
They may also offer only very limited customer support of any kind, requiring you to invest in your own developers and specialists to maintain and upgrade your system – yet another unwanted expense.
Buy cheap, buy twice?
“Buy cheap, buy twice” has become something of a cliché, but it rings true. By investing in an apparently inexpensive core banking or loan management system you’ll be left to foot the bill for additional server capacity or integrations.
Poor service, uninterested support teams or artificially imposed limits to your ability to scale will hinder your growth in the long term. Any ambitious financial institution will inevitably need to switch to a more flexible and extensible tech platform anyway, so why waste time with one that will only constrain your growth now?
If you need help choosing the right core banking solution, get in touch with our team of specialists today. Just fill in the form below to arrange a conversation.
