Why Your Community Bank Should Utilize Cloud Core Banking

Share this article

Modernize your operations without sacrificing what makes you different

Learn More

Managing a community bank today isn’t an easy feat. Customers expect fast, secure, and personalized service; however, traditional core banking systems can occasionally hinder the delivery of a positive banking experience.

Traditional banking systems often come with clunky physical servers, complicated hardware, and the frustration of long IT hold times, accompanied by the annoyance of elevator music. Not only does this leave you feeling stuck, but it can also slow down your operations and disappoint your customers.

Fortunately, there’s a better way to run your bank: cloud core banking.

In the 2024 Annual Survey of Community Banks, over 90% of community banks stated that adopting new technologies is essential to keeping up with customer demand, with 42% viewing cloud-based core systems as a promising opportunity.

In this article, we’ll share why a cloud-based core banking system is a smart move for community banks like yours and how it can help you deliver the personal service your customers deserve.

What Is Cloud Core Banking?

Cloud core banking is the process of migrating your core banking system for transactions, account management, and loan processing to an internet-based infrastructure, commonly referred to as the cloud. Cloud banking solutions allow you to securely manage your operations online, eliminating the need for physical servers at your branch locations.

While many cloud core banking solutions offer real-time processing, near-time processing strikes a better balance, keeping your customers’ banking information secure while still processing transactions multiple times a day.

How Does Cloud-Based Core Banking Work?

Core banking on the cloud replaces on-site servers with virtual ones through a cloud-based banking solutions provider, such as BMA. Once your virtual server is up and running, customers can make a deposit, withdrawal, or loan payment, and the data is sent securely in the cloud, processed there, and updated in real-time across all your systems — whether it’s at the branch, online, or in your mobile app.

Here’s how cloud core banking works behind the scenes:

Back-end processing system: Handles transactions, account updates, and loan processing quietly in the background, freeing your staff to focus on caring for bank members instead of technology issues.

Real-time data management: Keeps customers’ bank information up to date throughout the day.

Automates banking functions: Takes care of statements, alerts, and fraud detection automatically.

What Are the Benefits of Cloud Core Banking for Community Banks?

Cloud core banking enables your community bank to reduce costs, enhance security, integrate seamlessly with third-party applications, and better serve customers without losing what makes you special.

By moving your core baking to the cloud, you don’t have to worry about bulky servers, frustrating phone calls with IT, or paying for confusing software.

Let’s take a closer look at how cloud core banking can make your operations more efficient and your customers happier.

Cost Efficiency

One of the biggest perks of cloud core banking for your community bank is the significant savings you can achieve upfront and year after year. With traditional systems, you’re stuck buying pricey servers, paying for maintenance, and calling IT every time something goes wrong. In fact, a Forrester survey of CTOs found that most companies allocate 80% of their IT budget to maintaining legacy core systems.

With cloud-based banking system solutions, you can:

Lower maintenance costs by eliminating the need for on-site servers, constant updates, and emergency repairs, as your cloud banking hosting provider handles all of this for you.

Pay as you grow with BMA’s cloud-based core banking solution, which charges per account and service, so you’re only paying for what you use.

Security Features

Your members trust you to safeguard their money and personal information. Nearly 75% of customers say they would switch banks if they didn’t feel like they were protected enough from fraud. Core banking on the cloud makes protecting your customers’ data easier than ever through:

Multi-layered security controls: Instead of relying on a single line of defense, cloud-based banking creates layers of protection — such as firewalls, secure logins, and role-based permissions — to safeguard your systems from threats.

Advanced encryption protocols: Encryption scrambles sensitive data to keep your customers’ information out of the wrong hands.

Automated security updates: Cloud-based banking ensures your system is updated automatically without you having to call IT.

Customer Experience Benefits

While you take care of your members in-branch, cloud-based core banking is also taking care of them behind the scenes, ensuring a pain-free banking experience, whether they are. Here’s how cloud banking improves day-to-day operations:

24/7 service availability: Customers can access their accounts at any time, even outside of business hours.

Near-real-time processing: Transactions are processed multiple times a day, so customers aren’t left wondering where their money is.

Mobile banking capabilities: With cloud banking solutions, customers can manage accounts remotely from their phones, tablets, or computers in addition to visiting your bank.

Seamless Third-Party Integration

Cloud core banking easily connects with other software and services you and your members rely on, like:

CRMs to better manage your customer database and personalize service
Payment processing to ensure fast, secure transactions for your members
Loan platforms to streamline loan approvals and eliminate paperwork
Accounting software to keep track of your financial records

By integrating everything more seamlessly, your team can spend less time managing systems and more time connecting with your customers and serving the community.

What Are the Common Concerns With Cloud Core Banking?

Switching to a cloud-based core banking system is a significant step, and many community banks may have concerns about risk management, with nearly 96% citing cybersecurity as their most critical internal risk.

However, like any new banking system, you can take precautions by implementing data security measures, adhering to regulatory compliance, and selecting a reliable system. Here’s how:

Data security measures: Protect your bank and your members’ information with encryption, multi-factor authentication, and advanced security updates.

Regulatory Compliance: Ensure your cloud-based core banking system meets all relevant industry standards to maintain audit readiness for your bank.

System reliability: Choose a core banking cloud platform specifically designed for high usage and disaster recovery to ensure your services operate smoothly.

How to Future-Proof Your Community Bank

According to McKinsey, global IT savings from cloud adoption could reach $311 billion in operating savings by 2030. For your community bank, this means there’s a valuable opportunity to future-proof your operations while staying true to the personal touch your bank is known for.

By transitioning to cloud-based core banking, you can free up resources to invest in innovative services and stay competitive without losing focus on what matters most: your customers.

Long-Term Advantages of Cloud Core Banking

If you take advantage of the benefits of cloud-based core banking today, you’ll position your bank for success in the years ahead. Here are a few of the long-term advantages of cloud-based core banking to consider:

Innovation adoption: Quickly roll out new products, services, and digital experiences as customer expectations evolve.
Competitive edge: Stay ahead of the curve by offering modern conveniences alongside personalized service.
Operational efficiency: Simplify and automate processes to save time and resources.
Scalability: Expand as you grow without significant infrastructure changes or disruptions.

Cloud core banking isn’t designed to disrupt your operations but to enhance them, keeping you competitive and connected with your members. By embracing cloud-based core banking, you can save on costs, improve security, and provide the personalized experience your members expect today and in the years to come.

Transform the Banking Experience With BMA

At BMA, we go beyond simply delivering technology. We provide hands-on implementation support, staff training, and managed IT Services options to ensure your transition is smooth, strategic, and aligned with your goals.

Whether you’re moving from a legacy system or optimizing your existing infrastructure, our team works alongside yours to develop an approach strategy tailored to your institution’s pace and priorities. We’re here to make modernization manageable.

Ready to make the switch to cloud core banking? Contact BMA Banking Systems today for a consultation. After your consultation, we’ll perform an initial assessment to identify your banking needs and work with you to implement a customized core banking solution tailored to your business.