A digital core banking platform serves as the central hub powering the operations of modern financial institutions. It is the backbone for managing customer accounts, transactions, compliance, financial operations, and more. To effectively meet the diverse needs of banks and their customers, a digital core banking platform must offer a comprehensive range of features. These features can be broadly categorised into two groups: product features, which encompass the specific services and tools offered to customers, and functional features, which focus on the system’s operational capabilities.
Understanding these essential features is crucial for fintech companies and digital banks striving to deliver seamless, efficient, and innovative banking experiences in today’s competitive financial landscape. When selecting a core banking platform, evaluating its full range of features is important to ensure it meets all your operational and customer service needs. This article explores both the product and functional features that define a robust and effective digital core banking system.
- Product Features of a Digital Core Banking Platform
- 1. Customer Onboarding with Built-in AML/KYC Services
- 2. IBAN Generation and Account Creation
- 3. Debit and Prepaid Card Issuing
- 4. Payments and Transfers
- 5. Currency Exchange with Real-Time Information
- 6. Customer Management
- 7. General Ledger and Accounting
- 8. Two-Factor Authentication
- 9. Online (Web) and Mobile Banking Apps
- 10. Tariffs and Fees Module
- 11. Customer Chat Support
- Functional Features of a Digital Core Banking Platform
Product Features of a Digital Core Banking Platform
The product features of a digital core banking platform are the customer-facing services and tools that enable a fintech company or digital bank to deliver a seamless and efficient digital banking experience. These include customer onboarding, account management, payments, payment cards, and other functionalities that enhance customer interaction and streamline banking operations.
1. Customer Onboarding with Built-in AML/KYC Services
Effective customer onboarding is fundamental to any digital banking system. A modern digital core banking platform integrates reliable Anti-Money Laundering (AML) and Know Your Customer (KYC) services to ensure seamless and secure customer verification. Automated AML/KYC processes reduce manual intervention, streamline the management of customer applications, and improve compliance with regulatory standards, offering a faster and more secure way to onboard new clients.
This module should allow for setting limits, permissions, and other configurations based on the customer’s risk profile, whether for individual customers or groups. Depending on the defined workflow, the feature should also allow for turning on or off additional manual AML checks as needed.
2. IBAN Generation and Account Creation
A core feature of any digital banking platform is the automated generation of International Bank Account Numbers (IBANs) and customer accounts. The system should support creating various account types, including payment and current accounts. To generate standard or virtual IBANs, a company must either establish a direct connection to the SEPA system through a bank or payment system (e.g., CENTROlink) or integrate the digital core banking platform with a financial service provider via API.
3. Debit and Prepaid Card Issuing
Issuing debit and prepaid cards is a key component of modern digital banking services, enabling institutions to offer their clients a full suite of financial products. A digital core banking system should be integrated with authorised card providers like Decta and Wallester. This integration allows customers to order cards via mobile or web banking applications.
4. Payments and Transfers
Facilitating various types of payments and transfers is essential for any banking system. It allows customers to make internal, domestic, and international transactions effortlessly, thereby enhancing the overall banking experience. A comprehensive digital core banking platform should integrate with different payment service providers, supporting SEPA, SWIFT, and other local payment types, depending on the integrations available.
Based on business needs, digital banks or fintech companies form partnerships with payment service providers and connect to these services via API integration with their core banking system. Core banking system providers typically offer a list of pre-built integrations. However, if a fintech business requires a new integration, it can either request it from the core banking provider or develop it internally if it has access to the source code.
5. Currency Exchange with Real-Time Information
The ability to exchange currencies at real-time rates is invaluable for customers who engage in international transactions. A core banking system equipped with a currency exchange module and integrations with liquidity providers like Currency Cloud can offer access to real-time FX rates, making it easier for customers to perform conversions and manage foreign currency accounts efficiently.
6. Customer Management
Effective customer management is crucial to the success of any fintech or banking operation. A core banking system should offer comprehensive tools for handling customer data, preferences, and interactions. This includes a summary view of all relevant information, account management, transaction tracking, and personalised services based on customer behaviour. Additionally, a customer management module should allow for configuring specific rules, settings, and permissions, such as flagging customers based on AML/KYC data, setting payment limits, automating payments, or enabling manual checks when needed. Centralised customer management ensures that banks and fintech companies can deliver personalised services while maintaining strong client relationships.
7. General Ledger and Accounting
A digital core banking platform must include a robust accounting module that automates the recording of financial transactions, ensures compliance with accounting standards, and supports accurate financial reporting. This module is essential for maintaining financial transparency and stability within the institution. Key functions include a General Ledger and Chart of Accounts aligned with International Financial Reporting Standards (IFRS), seamless management of daily operations, tax periods, and the bank’s nostro and vostro accounts, with built-in reconciliation capabilities. Additionally, the module should offer comprehensive reporting tools to meet the needs of the accounting department, management, and regulators, supporting effective financial oversight.
8. Two-Factor Authentication
Two-factor authentication (2FA) is a critical security feature in core banking systems that protect sensitive financial data and transactions. It requires users to provide two forms of identification before accessing their accounts or completing transactions, typically combining something the user knows (like a password) with something they have (such as a smartphone or security token).
Various types of 2FA cater to different security needs, including one-time codes delivered via SMS or email, passwords used as a second factor, pre-generated lists of one-time codes, or codes generated by an authenticator app. Advanced methods, such as biometrics—fingerprint, face, or voice recognition—can also enhance security.
9. Online (Web) and Mobile Banking Apps
In today’s digital age, offering white-label web and mobile banking apps is essential. A core banking platform should provide seamless and consistent user experiences across both platforms, enabling customers to access their accounts, conduct transactions, and manage finances on the go. Developing proprietary web and mobile banking apps can take over a year, which is often impractical for fintech companies looking to enter the market quickly, especially given the industry’s rapid growth.
Providing white-label, customisable web and mobile banking apps is a crucial feature. This allows companies to tailor these apps to their specific business needs without investing significant time and resources in building their own solutions. The core banking system should also enable digital bank operators to easily customise their apps through a user-friendly back-office application, with changes reflected instantly in the apps. This approach accelerates market entry while ensuring a professional, branded customer experience.
10. Tariffs and Fees Module
Efficiently managing tariffs and fees is crucial for fintech companies and their customers. A digital core banking system should include a module for setting up and managing various charges, such as transaction fees, account maintenance fees, and service fees. This feature allows institutions to create transparent pricing structures and tailor services to different customer segments.
11. Customer Chat Support
Providing excellent customer support is key to building trust and loyalty. A built-in chat feature enables customers to communicate with support agents in real-time, resolving issues quickly and enhancing the customer experience. This module ensures customers receive timely and personalised support, whether they need help with transactions, account management, or troubleshooting.
Functional Features of a Digital Core Banking Platform
Functional features of a digital core banking platform focus on the system’s internal capabilities that drive operational efficiency and stability. These include real-time processing, data management, integrations, automation, and more—ensuring the platform can handle complex banking operations reliably and securely.
1. Real-time Processing
Real-time processing is fundamental to a core banking system, ensuring that transactions are updated instantly across all customer accounts. Whether it’s deposits, withdrawals, fund transfers, or payments, real-time processing guarantees that these transactions are immediately reflected in the system. This feature enhances the customer experience by providing up-to-date account information. It enables banks to operate efficiently in a fast-paced financial environment.
2. Transaction Initialisation
A robust digital core banking platform must facilitate the smooth initiation of various transactions, including card payments, transfers, and currency exchanges. Transaction initialisation involves promptly validating and processing requests while ensuring security and accuracy. This feature supports various digital banking activities, allowing customers and staff to execute transactions seamlessly through channels such as online banking, mobile apps, and ATMs.
3. Multicurrency Support
In today’s global economy, fintech companies and digital banks must handle multiple currencies to serve customers engaged in international transactions. Multicurrency support allows the digital core banking platform to manage accounts, transactions, and reporting in different currencies. This feature is essential for providing services like foreign currency accounts, international payments, and currency exchange, enabling financial services companies to cater to the diverse needs of their customers and business clients.
4. Automation
Automation is a key feature that enhances the efficiency of core banking systems by minimising manual intervention in routine processes. Automated workflows, such as transaction processing, customer onboarding, and compliance checks, reduce the risk of errors and free up staff to focus on more strategic tasks. Automation also improves service speed and consistency, providing customers with a seamless banking experience while enabling the fintech company to operate more efficiently.
5. Scalability
A digital core banking platform must be scalable to accommodate the financial institution’s growth and the increasing volume of transactions. Scalability ensures the system can handle a growing number of users, accounts, and transactions without compromising performance or reliability. This feature is crucial for banks looking to expand their customer base, introduce new services, or adapt to changing market demands, ensuring the system remains robust and responsive under varying loads.
6. Integration Capabilities
A digital core banking platform must seamlessly integrate with various third-party services and platforms, including payment service providers, gateways, card processors, liquidity providers, AML/KYC services, and other fintech solutions. These integrations allow fintech companies to expand their service offerings, optimise operations, and enhance the customer experience. Strong integration capabilities ensure the system remains adaptable to evolving technologies and shifting customer expectations.
7. Data Management
Effective data management is essential for the smooth operation of a core banking system. The system must handle vast amounts of data, including customer information, transaction histories, and financial records. Key data management features include data storage, retrieval, and processing, enabling banks to maintain accurate records, ensure data integrity, and comply with regulatory requirements. Proper data management also supports analytics and reporting, helping banks make informed business decisions.
8. Database Management
A reliable and secure database is the core of a banking system. Database management involves organising, storing, and securing data to ensure accessibility while protecting against unauthorised access or breaches. A digital core banking platform must support robust database management to handle high transaction volumes and complex queries efficiently. This feature is crucial for maintaining the system’s performance and security while providing a solid foundation for data-driven banking services.
9. Customisable User Interface
A customisable user interface (UI) allows financial services companies to tailor the system’s appearance and functionality to meet their specific needs and branding requirements. A user-friendly and intuitive UI enhances the experience for customers and staff, making navigating and utilising the system’s features easier.
Customisation options for the back-office interface enable fintechs to tailor dashboards and views for different roles, such as operators, managers, and compliance specialists. This ensures that each role has access to the necessary tools and information. For customers, fintech companies should be able to easily modify white-label web and mobile banking interfaces to align with their business needs. Additionally, operators should be able to make instant changes to end-user apps, such as adding or removing fields, adjusting process workflows, and ensuring overall flexibility, responsiveness, and a logical user experience (UX).
10. Account Management
Account management is a fundamental feature of any banking system, providing tools to create, modify, and monitor customer accounts. This includes managing various types of accounts, such as savings, current, loan, and investment accounts. A robust account management module supports tasks like balance inquiries, statement generation, transaction tracking, and account closure. It ensures that financial institutions can maintain accurate records, deliver personalised services, and effectively manage customer relationships.
11. Data Analytics and Reporting
Data analytics and reporting are essential components of a digital core banking system. They enable financial institutions to make informed decisions and gain insights into customer behaviour and operational efficiency. Advanced analytics tools allow companies to analyse large volumes of transaction data, detect patterns, and identify trends, helping them tailor services, mitigate risks, and enhance customer experiences.
Comprehensive reporting features provide real-time and historical data access, supporting regulatory compliance, performance tracking, and strategic planning. By leveraging data analytics and reporting, fintech companies optimise operations, improve customer engagement, maintain compliance, and stay competitive in the market.
Conclusion
In conclusion, a robust digital core banking platform is fundamental to the success of modern financial institutions. Its product and functional features—ranging from seamless integrations and automation capabilities to advanced security and data analytics—are critical for supporting the complex needs of today’s digital banking environment. By leveraging these features, financial institutions can drive operational efficiency, meet regulatory requirements, and deliver an enhanced customer experience. As technology and customer expectations evolve, the adaptability and innovation provided by a well-designed core banking system will be key to remaining competitive in the financial services landscape.
