Bridging the gap: Modernising banking systems for the digital era

Padmabhushan Bahadure

In a recent industry session at 4th Elets BFSI Gamechanger Summit took place on 9-11th June 2023 in Goa, Padmabhushan Bahadure, Chief Technology Officer, IDBI Bank, discussed the importance of addressing core banking systems in the context of transformation initiatives in the banking and insurance sectors. He highlighted the need for secure and efficient core banking systems to support new-age solutions and integrations.

The evolution of banking in India

Bahadure briefly mentioned the history of banking in India and the reforms that took place after 1991. He discussed the development of the core banking system, which centralised electronic fund transfers and introduced ATMs. He also mentioned the establishment of risk management practices and electronic clearing systems in banks. All these systems are converging towards a central data center with multiple availability zones where your core banking transactions are pushed in.

Security concerns and the rise of fintechs

However, there is apprehension in banks about the security of customer data and transactions in the digital world. Bahadure also mentioned the emergence of fintechs and the use of video KYCs and mobile onboarding for advances and deposits. He discussed the use of technologies and online platforms in the banking industry.

The need for modernisation

While there are many advancements in technology, the core banking systems remain unchanged. Bahadure mentioned specific banking systems and their use of older technologies like C++ and COBOL. He highlighted the need for modernisation in the banking industry and referenced a report by RBS on outsourcing and cloud-related initiatives. He suggested that regulations and guidelines should be established to guide banks in utilising cloud technology.

The future of core banking systems

Bahadure discussed the need for modern core banking systems to be cloud-ready, meaning they should have scalability, parallelism, and horizontal vertical scalability using new technologies. He also mentioned the importance of integration using APIs and the potential issues with file-based integrations. He emphasised the need for self-service, flexibility, and configurability in new age core banking systems.

He also mentioned the use of cloud readiness and scalability, as well as the use of engineered hardware in core banking systems. He suggested that running the system on non-engineered hardware could reduce costs.

The concept of 24×7 banking

Bahadure also mentioned the concept of having payment systems and banking available 24×7, but noted that collaboration and connectivity with other banks is also necessary. He discussed the concept of a 24×7 bank, which means there is no end-of-day processing for core banking.

The need for a new architecture

Bahadure mentioned that modern banking should take care of certain points from an architectural perspective, but there is limited visibility of these points in India. He also mentioned that some European markets have started using modern core banking solutions. However, no company has been able to develop a modern age core banking solution that is scalable and can be used by large banks.

He suggested that a bank with a minimum of 500-2000 branches and a high number of transactions per second (TPS) would be a good start for implementing this new architecture.


The session by Padmabhushan Bahadure provided a comprehensive overview of the current state of core banking in India and the need for modernisation. As the banking industry continues to evolve, it is clear that the core banking systems must also adapt to meet the changing needs of customers and the industry.

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