Core banking is a backend system that provides all mission-critical functionalities – backbone functionalities that are key to the running of a bank – which includes account management, transaction processing, deposit, general ledger, loan, and credit processing
For half a century, mainframes have proven to be a tested and trusted solution in handling core banking workloads. This is largely due to the fact that mainframes are a beast when it comes to raw processing power with the latest z16 being able to process 25 billion secure transactions per day!
Traditional banks have been unable to keep up with the fast pace of fintech digitalization because most core banking solutions target mainframes that use primitive languages such as COBOL and complex monolithic architecture. Changes also require planned downtimes to load even the smallest updates.
There is a severe scarcity of technology domain expertise required for business continuity in most traditional banks. Rather than work with “boring” programming languages, students and recent college graduates have opted for more “exciting” programming languages poised to take create cutting-edge solutions. Older ones with in-depth knowledge of how complex mainframes work and have been around supporting the core banking system are now retiring or are increasingly expensive to retain. This presents a risk that cannot be ignored as the safety reputation of any bank hinges on its risk culture.
A shift to the cloud offers a greatly reduced Total Cost of Ownership. Whereas the annual cost of maintaining a mainframe is estimated to be around $5 million, a similar workload running on a public cloud provider could be 10 times lower at around $550,000.
The Migration of core banking workloads is best done in phases to avoid disruption. Portions of mission-critical functionalities are broken down into microservices and shifted to the cloud in a “Lift and Shift” process starting from the least essential to the most essential functionalities.
Typically, a large organization like a traditional
bank will need more than 5000 million instructions per second (MIPS) capacity. For such a workload, twenty 1 TB solid-state drives can be used as primary storage while twenty 1TB hard disk drives provide a virtual tape.
Azure Active Directory can be leveraged when using Microsoft Azure to provide consistent and organizational-level security. This is in addition to the inherent defense system available on the cloud against distributed attacks. Azure Backup will provide a secure backup environment that ensures data in transit and at rest is protected even against ransomware attacks.
If you learned something new from this article, please like and share
Top comments (0)