How the cloud

is transforming
core banking.
 Contents. Introduction.
Introduction 3
What are the main elements of a modern core banking system? 4 What is a core banking system?
What categories of core banking systems are there? 5
• Enterprise core banking Ask yourself, what key functions do you expect
• Cloud-based core banking your bank to perform?
• Who uses them?
You probably want to access your transaction
What makes a cloud-based core banking system different? 8 accounts, manage your loans, pay your deposits,
• How does the cloud work? and make payments.
• APIs are the differentiator
All these functions are called core banking,
Should you adopt a cloud-based core banking system? 10 and your bank’s main job is to create a reliable,
durable network that allows you to perform basic
The risks of not switching 12 transactions from ATMs, Internet banking, mobile
banking and physical branches.
Time to transform 13
To do this, your bank needs a central system
About Oradian 14 that enables all of its day-to-day operations:
deposit management, loan processing, reporting,
accounting, and so on.
Enter the cloud.
Over the last few years, digitalisation has totally
transformed how banking and financial services
are delivered to end users. This has created a
set of strategic challenges to incumbents, as they
realised their fortresses were no longer robust, but
actually hindered their agility. This has led many
banks and financial institutions in search of a more
dynamic option.
Cloud-based core banking systems alleviate
many of the challenges posed by legacy systems.
Combined with the DevOps approach, the
cloud offers an unheard of level of flexibility,
and a significant opportunity to finally attack the
stubbornly high cost–income ratio. It has also
reduced the fixed operational costs, turning
everything into a pay-as-you-consume service.
This has given structurally challenging areas of
banking such as micro lending and SME lending
2 3
A core banking system, then, is the architecture
that facilitates all this. It is the computer network
that allows this information to be shared across all
a bank’s branches and systems, traditionally from
a centralised database built on an on-premises
server.
The global core banking software market was
estimated to be worth USD 10.8 billion in 2021 by
Fortune Business Insights. It also predicted the
market would grow to an astonishing USD 40.67
billion by 2029, with a CAGR of 18.3%.
This enormous growth is testament to the rapid
evolution of core banking technology, and at the
heart of that transformation is the cloud.
the chance to finally become both profitable and
globally scalable.
Oradian’s core banking system is one example
of how this new technology has made financial
systems more responsive, more flexible, and
ultimately more useful to customers even in the
world’s most remote locations.
But what is it that makes them so successful, and
why do financial institutions choose to make the
switch?
This paper provides a broad overview of cloud-
based core banking systems – what they are, how
they work, and why it might be time to consider
switching your own.
 Enterprise core banking Cloud-based core banking

Enterprise core banking systems, or “legacy” Cloud-based core banking systems are designed
systems, are typically based around a physical, precisely to avoid the pitfalls of their older
on-premises mainframe. They may be off-the-shelf counterparts.

Two categories
or specifically designed for a bank to perform its
core business functions.
Many have been around for decades, are
designed to perform a wide range of functions,
Since they’re based entirely on the cloud, they
don’t require on-premises server infrastructure,
and therefore no investment in an engineering
team. There is also no need to invest in dedicated

of core banking
and are usually extremely reliable. This reliability
is business-critical: any outage is extremely costly,
both in terms of regulatory scrutiny and customer
trust.
servers (and their redundant systems) and
expensive additional software like firewalls.
This means a budget that would otherwise be
spent on hardware, software and maintenance

system.
As a result, these older core banking systems
are designed for reliability rather than flexibility.
Their age means they may have accumulated a
significant technology debt over the years. The
tech stacks upon which they are built require
maintenance skills that are becoming harder and
harder to find, causing systemic risks for large
Tier 1 banks. Combined with the non-stop pace
of regulatory change, these legacy systems have
become increasingly expensive to maintain.
can be reserved for recruitment and day-to-day
operations.
They’re flexible, too. The architecture of a cloud-
based system can be adapted for any bank or
financial institution’s particular need.
They usually enable API integration, making
it easy to add new integrations or extend their
services available to multiple proprietary or third-
party platforms.

1. Cash management 3. Data management and reporting

The main task of any core banking system is to A banking platform needs to store enormous

The four elements

facilitate the basic cash transactions customers
must make daily. That means deposits,
withdrawals, and transfers, as well as bill
payments, credit card payments, remittances, and
online retail transactions. These can be processed
amounts of data. It must gather, consolidate and
analyse insights about client behaviour, business
performance, and transactions so the bank can
make key decisions about which financial products
to recommend or launch.

of a modern core
digitally and instantly, without any physical
interaction, making them ideal for customers in
remote or poorly served locations.

banking system.
2. Loan management system 4. Apps and third-party integration

A loan management system automates the entire
lending lifecycle. They focus on improving the
quality of a lender’s loan books by providing better
origination, risk management and decisioning
tools. They also make collections more efficient,
reducing default, eliminating human error, and
helping with loan restructuring.
More and more banking clients access their
accounts primarily on mobile and tablet apps, so
any modern core banking system must seamlessly
offer all its functions in a digital format. These
days, they increasingly need to integrate with third-
party platforms using APIs to securely share data
between systems.

4 5
Who uses core What percentage of your bank’s applications are curently in the cloud? And what

banking systems?
percentage would you like to be in the cloud in three years?

45%
41%

28% 27%
23%
Major financial institutions and legacy banks will Adoption is slow, but real. A survey by Accenture 22%
usually have an old-school enterprise core banking found that, in 2021, mainstream banks only handle
system, one that has been honed over many about 12% of their total workload on the cloud,
years to reliably perform the main functions of with that number as low as 7% in growth markets
transaction banking. and 5% in Europe. 8%

For the smaller institutions – the nimble, agile
fintechs, microfinance institutions and assorted
disruptors – the cloud-based core banking system
is the go-to, as it gives them the flexibility and
adaptability they require to scale at speed.
Leading global financial institutions like Goldman
Sachs and Deutsche Bank are accelerating their
adoption of cloud technology, demonstrating its
growing appeal even to the so-called “dinosaurs”
of finance.
Accenture found that, although banks had made 4%
good progress shifting back-office functions like 1%
0%
HR, finance, marketing, sales, operations, and IT
to the cloud, only around 3% of consumer banking 0-10% 11-30% 31-50% 51+% Don’t know
operations across these markets had been
migrated.
Applications in the cloud today Applications in the cloud in three years
However, a separate survey of 250 global banking
leaders by Publicis Sapient and Google Cloud
revealed big ambitions within the industry for cloud
adoption in the future.
What percentage of your bank’s data is curently in the cloud? And what percentage
would you like to be in the cloud in three years?

40% 40%

29%
28%
26%
20%

10%

5%

0% 1%

0-10% 11-30% 31-50% 51+% Don’t know

Data in the cloud today Data in the cloud in three years

(Source: A survey of 250 global banking leaders by Publicis Sapient and Google Cloud.)

7
 What makes a
good cloud-based
core banking
system different?
Although a cloud-based core banking system
performs the same basic function as an enterprise
system, it is a backed by a different technological
architecture.
Instead of an on-premises server, all a bank’s
systems and data are hosted in the cloud on a
network of secure datacentres. The only thing
required to access it is an Internet connection.
This means a cloud-based core banking system
is infinitely scalable. A legacy system that relies
on a physical servers can only go as far as this
How does the cloud work?
Cloud service providers such as AWS (Amazon),
Azure (Microsoft), or GCP (Google Cloud Platform)
manage the complex infrastructure behind the
cloud, allowing banks to use it for a fee. Some of
the standard cloud service models include:
Business Process-as-a-Service (BPaaS) –
enables everyday operations like billing and
human resources
Infrastructure-as-a-Service (IaaS) – delivers
full core banking infrastructure that handles
business operations and software integrations
8 9
infrastructure allows. Cloud architecture scales as
a business scales.
Data from software firm Flexera revealed in
2022 that 80% of enterprises have opted for a
hybrid approach combining the use of a public
and private cloud. Among public cloud solutions,
Amazon Web Services remains dominant,
although competitors are beginning to emerge.
Software-as-a-Service (SaaS) – provides
cloud-based banking software for accounting,
invoicing, customer relationship management
Platform-as-a-Service (PaaS) – offers a
cloud-based core banking platform for app and
database development.
Service providers
can offer one
of the following
types of cloud:
APIs are the differentiator.
One of the most important characteristics setting
cloud-based core banking systems apart from
legacy systems is API connectivity.
APIs (Application Programming Interface) act as
intermediaries between applications so they can
communicate with each other. They allow one
application to view, retrieve, input or update
information in the other by passing on requests and
returning data.
APIs enable a core banking system to connect
to hundreds of other applications and services
quickly and securely.
Oradian’s core banking system is API-first,
meaning it can integrate with third-party products
embedded into it, rather than added as an
afterthought. Systems like Oradian’s are designed
not just for backwards compatibility, but also to
connect seamlessly to applications that are yet to
be released.
APIs make connecting applications and
services simple as “plug and play” and they are
easy for developers to use because they are
built to common standards (such as REST and
SOAP) and use a common data format (JSON).
They effectively bridge the gap between legacy
Public cloud: owned and operated by a third-
party provider and delivered over the internet,
with the same hardware, storage, and network
devices shared with other organisations. This
option is cheap, reliable, and scalable.
Private cloud: used exclusively by one
organisation, either physically located at its own
datacentre, or hosted by a third-party provider.
This option is flexible, secure, and allows an
organisation more control over its services.
Hybrid cloud: combines on-premises
infrastructure with a public cloud, allowing
data and apps to move between the two
environments. Organisations can maintain a
private infrastructure for sensitive data while
taking advantage of the flexibility and scalability of
the public cloud.
systems and new technologies, making workflows
faster and more efficient through automation.
This makes it easy to personalise the user
experience, create new usecases for existing data
and aid innovation by significantly speeding up the
process of new product development.
Some of the systems you can connect using APIs
include:
API
Accounting Compliance
Loan Management Business Intelligence
In-house / Legacy Credit scoring
Field collections Human resources
eWallets Payments
Messaging Marketing
and many more
 Should you move
to a cloud-based
core banking
system?
Although your existing core banking system might be reliable, it might be time to consider
switching to a modern, cloud-based system. But what might prompt such a change?
Perhaps your older system can no longer keep up with your customers’ demand for new
features, or maybe maintaining and upgrading it has become so complex, costly and time-
consuming that it has become a serious problem for your bottom line.
But instead of concentrating on the deficiencies of your existing system, consider some of the
key benefits of a cloud-based core banking platform:
1. Efficiency
Today, customers all over the world demand
instant, real-time financial transactions. This
is particularly important in locations without
physical bank branches, where some kind of
digital platform is literally essential for day-to-
day life.
Although legacy systems are fairly efficient
these days, cloud-based core banking
platforms give banks a tangible and definite
edge.
The cloud allows firms to avoid inefficient data
siloes by capturing and storing enormous
amounts of customer data on a centralised
platform. This improves operational speed and
helps generate better data insights.
10
2. Flexibility
Although traditional core banking systems are
designed to perform a wide variety of functions
straight out of the box, they often offer very little
scope for change and adaptation.
Cloud technology, by contrast, is designed to be
more open and flexible. It enables organisations
to launch new products quickly and
seamlessly, for instance by using DevOps tools
to introduce automation into app development
to continuously deliver new features.
For Oradian, the key concept is “extensibility”,
that is, software that has been designed to
allow for future growth and development of the
platform as a whole, rather than the piecemeal
addition of new features for individual clients.
This flexibility makes banks and financial
institutions more agile, enabling them to
respond instantly to changing market conditions
and customer demand. Unlike legacy systems,
cloud technology is inherently scalable and
“elastic”, meaning resources can be provisioned
or de-provisioned according to need.
Without this ability, older systems can be a
bottleneck to change, with outdated code and
an inability to interface with third-party systems
turning them into an evolutionary dead-end.
3. Security and data continuity
Some people may instinctively recoil at the idea
of the cloud. Media coverage of leaks, hacks,
and data breaches create an impression of a
leaky sieve.
However, cloud-based core banking systems
embed security into their architecture and
constantly analyse it for security flaws. This
makes them less vulnerable to data tampering
than traditional systems, with banking data
digitally safeguarded from cybersecurity threats.
The inherent flexibility of cloud-based systems
also makes it easier to update and reinforce
security processes and create back-ups to
protect sensitive data from outages caused by
natural disasters or human error, meaning there
is a much lower risk to business continuity.
4. Cost-effective maintenance
Eventually, any legacy core banking system
will become obsolete as developers withdraw
support for older features, or as it simply
becomes unable to keep up with customer
demand for new functionalities.
This makes maintaining and upgrading an older
system harder and harder as time goes on,
requiring a bank either to replace old features
piecemeal, or to divert precious resources into
hiring from a diminishing pool of experts with
the knowledge to sustain them.
A cloud-based core banking system does
not rely on physical server infrastructure.
With so much of its architecture on the cloud,
maintaining, and upgrading a modern core
banking system no longer requires investment
in a qualified pool of engineers and experts, nor
in complex upgrades every time a piece of kit
becomes obsolete.
5. Customer insights
Customers demand an ever-increasing level
of personal engagement, and they are happy
to move their accounts to any bank that meets
their specific needs and demands.
With a traditional core banking system, it’s
possible to gain insights about customer
behaviour, but a cloud-based platform can
do this quickly, seamlessly, and constantly
as providers can easily combine and expand
their datasets through connections to external
systems.
The cloud facilitates real-time data analysis,
so a bank can make accurate and timely
predictions about customer behaviour and
develop their offering accordingly. This provides
the scope for an unprecedented level of
customer personalisation and engagement
based on a more complete picture than ever
before.
This, in turn, improves customer loyalty and
retention, giving cloud-based banks an edge
over their more pedestrian competitors.
11
 The risks of not
switching.
Switching to a cloud-based core banking
system can be a costly procedure – even a
relatively straightforward switchover requires
changes to business practices and lengthy staff
training programmes. A successful migration
demands careful planning and a dedicated
effort.
Not switching however can give your
competitors an edge. Should your competitors
suddenly start offering a more nimble, flexible,
secure banking platform, with all the benefits to
customer engagement that brings, you might
find your customers start believing the grass is
greener on the other side.
In addition, the security benefits of a cloud-
based system are simply too good to pass up.
Customers will feel happier if they know their
money and their data is less at risk from leaks,
hacks, and tampering.
Major corporate and commercial banks are
already moving at least some of their banking
systems to the cloud and this trends is only set
to increase.
12
Becoming cloud-first has become a matter of
when, not if, and the majority of leading fintechs
and digital lenders have been reliant on cloud
services for years already.
You do not have to move all your systems to
the cloud from day one. It can be a complex
and costly a process, but you can start moving
less critical parts of the system to the cloud and
begin the organisational change management
to a cloud core banking standard.
Time to transform.
Financial institutions are naturally, and
understandably, risk averse. The flexibility and
agility of the cloud means it’s possible to adopt
certain modern technologies in a piecemeal
fashion, should it suit your business needs.
But the benefits of adoption are clear, and at
Oradian we believe there’s no better time for
financial services organisations – from fast-
growing fintechs to rural and regional banks
to the world’s biggest banks – to embrace
technological modernisation.
From higher operational speeds to rapid
business insights and improvements, your
customers will thank you for it.
13
About Oradian
Oradian provides a cloud-based core banking
system that serves over 10 million people
globally.

Flexible and extendable, Oradian supports over

50 institutional customers across 12 countries
to scale their business, to think bigger and go
further.

If you would like to know more about our

services or want to compare Oradian’s core
banking system with your current provider,
our expert team is on hand for a no-obligation
consultation.

Contact us at hello@oradian.com or via the

website: www.oradian.com.