Banking Software - Features, Benefits and powerful Software

Jan Schäfer

With the introduction of risk management, customer relationship management (CRM) and automated lending, banks quickly faced a challenge: How were they to manage the volumes of data generated in this way? Because the task areas quickly generated more data than they could evaluate.

Then, in recent years, the sector took a decisive step. Financial institutions began to use special banking software to automate certain workflows. However, many banks still do not use the full potential of automation.

We explain the areas of application for banking software and the role played by artificial intelligence (AI). We also show you which software you should use for which individual challenge.

Areas of Application of a Banking Software

banking software areas of application

A look at possible areas of application shows how essential banking software is for financial institutions. In particular, you can integrate AI-driven solutions in almost all areas of a bank's work and thus optimize the processes there:

Customer management and CRM 

Banks use software to manage customer data, accounts, transactions and communications. Programs with advanced technologies automatically create customer profiles, track transaction histories, and suggest personalized services. In this way, banks increase customer satisfaction and, consequently, customer loyalty. So, for example, if a bank uses a CRM software, to store all interactions with a customer, customer service representatives have quick access to all relevant information. This enables them to support customers efficiently.

Transaction processing and payment processing

Banking software automates the transaction processing process, including wire transfers, direct debits, check processing, and electronic payments. As a result, financial institutions perform transactions faster and with fewer errors. In practice, therefore, they use banking software to automatically transfer salary payments to employee accounts, for example.

Risk management and compliance

Banks use software to monitor risks, ensure compliance, and fight money laundering and fraud. This helps them minimize financial losses and avoid legal problems. For example, banks use anti-money laundering software to identify and report suspicious transactions to the relevant authorities.

Investment and portfolio management

Banks use software to manage investment portfolios, analyze market data, and make investment decisions. This enables them to optimize asset allocation and provide better returns for customers. In practice, for example, banks provide a high-net-worth client with recommendations for a diversified investment strategy based on their financial goals.

Lending and credit management 

Banks use software to process loan applications, assess the creditworthiness of applicants and manage loan agreements. This enables efficient lending and monitoring. So in practice, if a small business owner applies for a loan online, for example, the bank uses its software to quickly assess his or her creditworthiness and make a decision.

banking software benefits

Benefits of a Banking Software - and with which Provider you achieve them

The areas of application of banking software already give an idea of how comprehensively financial institutions benefit from an intelligent solution. They work more efficiently, more securely and more customer-oriented. What are the benefits in detail? 

Process automation

With software, banks reduce manual tasks such as processing transfers, creating account statements and managing invoices. In this way, they not only save a lot of time, but also allow employees to focus on more demanding tasks. For example, with the help of software, a bank sets up standing orders automatically without customers having to take manual action each time.

Some of the best-known and most commonly used programs for this purpose are SAP, Finastra and Temenos. They offer a wide range of functions that primarily help banks to optimize and automate their payment processing:

SDK.finance

SDK.finance is a core banking platform provider that uses modern tools to help financial institutions modernize their services quickly and easily. The software offers a range of functions for the Automation of processes, such as automating financial transactions through the use of its open APIs, processing unstructured data using artificial intelligence, integrating with third-party solutions through the use of REST APIs, and customizability through the purchase of a source code license. 

Finastra

Finastra is a global financial services software provider that leads banking, capital markets and risk management solutions. Finastra's Fusion Global PAYplus solution is a comprehensive payment processing platform that enables fast and secure transaction processing.

Temenos

Temenos has banking software that provides solutions in the areas of core banking, payments and wealth management. The Temenos Payments solution is a comprehensive payment processing platform that enables fast and secure processing of transactions.

Artificial Intelligence Integration

The use of software for banks enables the integration of artificial intelligence (AI) into everyday processes. Banks benefit from this along their entire value chain. For example, AI increases the efficiency of banking processes by automating repetitive tasks and supporting decision-making. AI improves risk management by identifying patterns in big data and making predictions about future developments. In addition, AI optimizes the customer experience by providing personalized services and improving customer communication. Overall, using software for banks with AI increases competitiveness and optimizes business processes. These 3 providers are established for this purpose: 

Konfuzio

Konfuzio is an AI-based platform for the automated processing and analysis of unstructured text data. This means that banks can use the software to capture, categorize, evaluate and transfer data to connected workflows in a fully automated manner.

In order to set up individual rules for processes quickly and easily, the software has an advanced AI, Machine Learning (ML) as well as Deep Learning.

In practice, Konfuzio thus makes it possible to fully automate all data processing processes. To convince themselves of the comprehensive possibilities of the software, banks can test the platform for free.

Ayasdi

Ayasdi is a software solution that uses artificial intelligence and machine learning to help banks identify patterns in big data to improve risk management and decision making. The software uses advanced algorithms to analyze complex data and extract valuable insights. Ayasdi also offers process automation features, such as automatic report generation and automatic risk monitoring. Banks can customize the software to meet their individual needs.

Personetics

Personetics is an AI-powered platform that banks use to deliver personalized and proactive services to their customers. The software uses advanced algorithms to analyze customer behavior and needs to create personalized recommendations and offers. Personetics also offers process automation capabilities, such as automatic savings plan creation and automatic account balance monitoring.

Improved data management

Banks generate huge amounts of data every day - from customer data to transaction histories. Banking software enables them to capture, store and manage this data in a structured way. This not only makes it easier for them to search for relevant information, but also enables in-depth analysis to gain insights into customer behavior and market trends. For example, a bank can use software to analyze the spending behavior of its customers and make individual savings or investment suggestions based on this. 3 Established programs for this are OsPlus, IBM DB2 and Oracle Database:

OsPlus

One System Plus (OSPlus) is a core banking system produced by Finanz Informatik. It is the leading core banking system for savings banks in Germany and offers a wide range of data management functions. OSPlus enables banks to centrally manage and analyze their customer data in order to make informed decisions and offer personalized services. The software also offers functions for automating processes, such as the automatic generation of reports and the automatic monitoring of risks. 

IBM DB2

IBM DB2 is a relational database management system that processes data streams in a powerful, scalable and reliable way. The target audience for this software is companies of all sizes that want to manage their data efficiently.

Oracle Database

Oracle Database is a relational database management system that provides a wide range of data management, analysis and security features. 

Increase safety

Protecting customer data and transactions is at the heart of banking. Software implements strict security mechanisms for this purpose, such as data encryption and multi-level authentication.

In this way, banks ensure the integrity and confidentiality of information.

This helps them prevent cyberattacks and data breaches. For example, software for this encrypts sensitive customer data during transmission to ensure that it is not intercepted by third parties. 3 renowned providers for data security are Symantec, McAfee and IBM Security:

Symantec

Symantec is a security software provider that leads endpoint, network, and cloud security solutions. Symantec's portfolio for banks includes features such as malware protection, firewall management and email security.

McAfee

McAfee - just like Symantec - offers security software for endpoint, network and cloud security. McAfee solutions for banks also include features such as malware protection, firewall management, and email security.

IBM Security

IBM Security has a comprehensive range of data security solutions tailored to the needs of banks. These include functions such as identity and access management, data encryption and security monitoring.

Customer Relationship Management (CRM)

With a CRM system, banks record detailed customer information and interactions. This enables them to provide personalized customer care. Employees have an insight into the needs, preferences and problems of customers at all times. For example, a bank employee uses the software to recognize when a customer is considering a particular financial product and then provides targeted, relevant information. The 3 most common CRM programs for banks are Salesforce Sales Cloud, Zoho CRM and Microsoft Dynamics 365:

Salesforce Sales Cloud

Salesforce Sales Cloud is an on-demand CRM platform that provides applications for small, medium, and large businesses focused on sales and customer relationships. Key features include contact and lead management, sales forecasting, reporting and analytics, and marketing automation.

Zoho CRM

Zoho CRM is a cloud-based business management platform that serves businesses of all sizes. It offers sales and marketing automation tools with help desk, analytics and customer support capabilities. Key features include lead management, contact management, sales forecasting and reporting.

Microsoft Dynamics 365

Microsoft Dynamics 365 is a cloud-based CRM ecosystem for small, medium and large businesses with a focus on sales, field service and customer service, as well as strong integrations with Microsoft's other Office 365 offerings. Key features include contact management, lead management, sales forecasting and reporting, and marketing automation.

Faster decision making

Banking software provides real-time access to critical information. As a result, companies make faster and more informed decisions. So, for example, when a borrower makes an inquiry, the software automatically performs a credit check and provides relevant data to the decision maker immediately. As a result, banks make credit decisions efficiently. 3 relevant vendors for this are FICO, Experian and Equifax:

FICO

FICO provides analytics software for risk management and decision making. Here, the FICO Score solution is a well-known credit score model that banks use to evaluate the creditworthiness of customers. In doing so, the software also makes predictions about possible payment defaults.

Experian

Experian has digital solutions for enterprise risk management and decision making. In this regard, the Experian Decision Analytics solution provides banks with a wide range of tools to support lending. Like its competitor FICO, its key features include credit scoring and default prediction.

Equifax

Equifax is a global information services provider that delivers risk management and decision-making tools. The Equifax Risk Solutions solution provides banks with a wide range of tools to assist in lending operations. In addition, banks also use the software to predict customer payment defaults.

Efficient risk management

Software uses advanced analytics to identify potential risks in loan portfolios. For example, if it detects signs of rising default rates in certain loan segments, a bank is able to take proactive measures to minimize losses - such as repricing loans or adjusting credit policies. Established banking software vendors for risk management include SAS, Moody's Analytics, Fiserv and 360T:

SAS

SAS has analytics software for risk management and decision making. In doing so, the SAS Risk Management solution provides banks with a wide range of tools to support risk assessment and management. Key capabilities include credit, market and operational risk assessment, default prediction and decision support.

Moody's Analytics

Moody's Analytics offers a wide range of risk management solutions tailored to the needs of banks. These include functions such as credit risk assessment, market and liquidity risk management, and operational risk management. These solutions help banks identify, assess and manage their risks to optimize their business processes and better serve their customers.

Fiserv

Fiserv is a global provider of financial services software that carries solutions for banking, capital markets and risk management in its portfolio. The Fiserv Risk and Compliance solution provides banks with a wide range of tools to support risk assessment and management. Similar to SAS and Moody's Analytics, key features include credit, market and operational risk assessment, default prediction and decision support.

360T

360T is a trading platform for financial institutions that offers a wide range of risk management features. The platform enables banks to monitor their trading activities in real time and quickly identify and manage risks. 360T also offers process automation features, such as limit monitoring and report generation. Overall, 360T helps banks manage their trading activities more efficiently and manage their risks better.

Improved customer service

With banking software, financial institutions respond effectively to inquiries and provide personalized service to customers. The introduction of chatbots or self-service portals enables customers to receive support around the clock. For example, if a customer has questions about their account activity, the software automatically provides relevant transaction details. 3 renowned providers for customer service automation are BankMedia, Backbase and FIS Profile:

Bank Media

Bank-Media has various tools for banks in its portfolio. The "Online Bank Forms" software is particularly relevant for customer service. It enables financial institutions to manage their forms digitally and thus offer their customers easy access to these forms. 

Backbase

Backbase is an omni-channel banking platform designed specifically for banks. The platform offers features to improve customer service, such as personalized customer interactions, automated onboarding processes and detailed insights into customer behavior.

FIS Profiles

FIS Profile is a core banking solution that helps banks optimize their business processes and better serve their customers. To this end, the software offers functions for automating processes, such as the automatic processing of transactions and the automatic monitoring of risks. 

banking software use case

Banking Software - Use Case

The areas of application and the resulting benefits of software for banks are far-reaching. They can better serve existing customers, make processes more efficient, and make more informed decisions. What an important role artificial intelligence, plays in this, illustrates the following use case:

Automating and optimizing loan application processes in a bank with AI software.

A bank has a busy loan application process that requires manual reviews, data analysis, and decisions. This process is time-consuming and causes delays in loan approval. The bank therefore decides to use an AI software to make the process more efficient and easier.

Steps of process optimization

AI software for banks improves each step of the credit review process in the following ways:

Credit application receipt

A customer submits a loan application online via the bank's website. The AI software automatically captures the application data and creates a digital file for the application.

Data validation and verification

The AI software checks the submitted data for completeness and plausibility. For example, the software ensures that all required fields are filled in and that the information is in line with bank guidelines.

Data analysis and comparison

The software for banks performs a comprehensive analysis of customer information. It automatically checks the customer's creditworthiness against credit scores, compares the application details with existing customer data and assesses the customer's financial stability.

Credit Risk Assessment

Based on the collected data and analysis, the banking software calculates the risk associated with granting the loan. It takes into account factors such as the customer's income, credit history and debt burden.

Automatic decision recommendation

The AI software generates an automatic decision recommendation for the loan application. For example, if the customer has a positive credit score and a stable financial situation, the software makes a positive recommendation for the loan.

Decision documentation

The program documents the automatic recommendation in the digital file of the credit application. It clearly states the basis on which it made the recommendation and the factors it took into account.

Employee verification and approval

The automated recommendation is forwarded to a bank employee who makes the final decision. The employee can access the collected information, analysis and the automated recommendation to make a final approval or rejection.

Advantages of the optimized process

The bank benefits from faster lending like this:

Accelerated processing time

Thanks to the banking software, the bank processes loan applications in less time because most of the process is automated. In this way, it makes faster decisions for customers.

Consistent decisions

The automatic decision recommendation is based on objective factors and data analysis. The bank thus makes consistent and fair decisions.

Resource Saving

To process loan applications manually, the bank previously had to deploy extensive human resources. The AI software significantly reduces the workload and allows employees to focus on more complex tasks.

Better customer retention

As the financial institution makes credit decisions faster, it increases customer satisfaction. Customers experience smooth and efficient credit application processing.

Reduced risk

The AI software performs accurate credit risk assessments, minimizing the likelihood of default risks. This makes the bank more competitive.

FAQ

How do financial institutions benefit from using banking software?

Banking software enables financial institutions to run more efficient processes in core banking, transaction processing and customer management. In the process, automation reduces human error and increases productivity. It improves risk management and compliance. In addition, software increases customer satisfaction as banks have fast response times and access to real-time data. Overall, banking software strengthens competitiveness and enables more agile action in a constantly changing market environment.

What are the areas of application for banking software?

Banking software can be used in various areas to support the business processes of financial service providers. These include, for example, retail banking, lending business, corporate banking and investment business. Software helps process transactions, handle customer inquiries, sell financial products, and manage risk. This helps to increase efficiency and improve the customer experience.

Which banking software providers are there?

There are numerous banking software providers that have different solutions in their portfolio. These include Kordoba, KMS Lighthouse, G&H, EFDIS and Konfuzio, among others. Konfuzio specializes in automated text analysis. In practice, the AI software is therefore particularly suitable for automating processes such as the processing of data from documents and contracts. The software automatically extracts and analyzes relevant information from large volumes of text. Banks thus make their processes more efficient and error-free. They make more informed, data-driven decisions.

Would you like to learn more about the use of AI-driven software in your bank? Then get in touch now advised by one of our experts!

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