Core banking software or simply “core” is the backend software that powers a financial institution.
The core is the center of all bank operations. As a centralized record keeping system, the core processes deposits, payments, loans, and also manages customer information.
Ostensibly, the core is just a spreadsheet layered on top of a big pile of money. Your checking account has the look and feel of a structured tranche of money — but, it’s just software that provides the illusion of separation.
If you have a background in computer science, and an understanding of accounting, I guarantee that you can build your own core. However, for most U.S. bank CEOs, this concept is absolutely inconceivable.
The fact that most of this stuff is so old it’s still running on COBOL is a pretty good hint as to why the slowest apps on my phone are the ones that connect to my bank account. And why those apps have to do so by logging in to my bank’s website and then scraping data off that.
I’ve said it before and I’ll say it again: my Facebook account is significantly harder to get into than my bank account. Facebook has better password support1 as well as two-factor authentication. And when I want to give an app partial access to my Facebook account, there’s a way to do that. With my bank, access is either “can do whatever they want with my account, including transfers,” or “no access at all.”
Banks need a good, central API, the same way Facebook has one. Read-only access, API keys rather than username/password combos… the security benefits alone would be incredible, and that’s not even getting into the increase in functionality the users would see.
- My bank won’t let me include special characters, and also limits the length of the password. ↩