Core Banking Solution: How to Choose the Right One for PayTech Firm

The term core banking solution is traditionally associated with licensed banks and their central systems for managing deposits, loans, and customer accounts. However, in the context of this article,  focused on the needs of PayTechs, electronic money institutions (EMIs), authorised payment institutions (APIs), and similar non-bank financial entities, we use a broader, more functional definition.

For the purpose of this article, a core banking solution refers to the digital ledger and transaction processing platform that serves as the operational backbone of a PayTech business. Whether the institution holds a full banking license, operates under e-money or payment services regulation, or leverages Banking-as-a-Service (BaaS) infrastructure, this “core” is responsible for managing customer balances, executing transactions, maintaining financial records, and integrating with surrounding systems (e.g. payments, compliance, CRM). In short, regardless of regulatory status, if your business manages customer funds or facilitates financial transactions, your core banking solution plays a central role, and evaluating it correctly is mission-critical.

NOTE: This article acts as an explanation in relation to what you should look at whilst choosing the most robust core banking solution. At the end of it, you’ll have an opportunity to download our own devised comprehensive questionnaire that you could share with vendors whenever evaluating their solutions. If at any point you get tired of reading through the detailed explanation, feel free to scroll to the end and download the questionnaire. NB, we tried to be as impartial as it is possible whilst devising it, so even our solution wouldn’t score perfectly well with it… You can even ask us the same questions if you wish.

What does a good modern core banking solution include?

Being the most important part of all operations, and a single point of failure, the core banking solution must be chosen carefully by performing a comprehensive and systemic evaluation. A good modern core banking solution typically provides account and customer management, e-money issuance and redemption, payment processing, multicurrency support and FX, and an integrated management and financial reporting. Rarely do core banking solutions include a comprehensive CRM and AML/CTF/risk scoring/fincrime management module. In evaluating such systems, PayTechs must balance core banking solution standard features (like ledgers, payment integration, security) with availability of the CRM/compliance features, and license/deployment choices (cloud vs on-premises and SaaS vs perpetual license). A modern, powerful, and scalable core banking solution can be configured for diverse regulatory environments worldwide. In this article, we’ll explore general considerations and key functional areas – including accounting/finance, users, compliance, payment processing, tech stack, security, and customer management – to help PayTechs choose the best core banking solution.

General Considerations

What are the functions of a core banking solution?

At a high level, your chosen core banking solution should support the foundational banking functions: a multi-currency general ledger, account and transaction management, and robust financial reporting. It must be built for high throughput and real-time operations, especially as PayTechs increasingly rely on 24/7 instant payment capabilities. In this context, real-time core processing and automated connectivity to payment networks (e.g., FedNow, SEPA Instant, Faster Payments) are not optional—they’re essential. The core banking solution should be able to scale horizontally (to handle growing transaction volumes) and vertically (to support expansion into new product lines or markets).

However, many modern core banking solutions are delivered as barebones engines, offering only the essential ledger and transaction logic without surrounding modules like internet banking, mobile apps, CRM, or AML/CTF/fincrime/risk management. This presents a strategic decision point for PayTech firms:

Should you choose a minimalist core and build your ecosystem through third-party integrations, or select a more comprehensive core that includes many of these features natively?

What is the minimalist approach to building the core banking solution?

The minimalist approach, buying just the “core” and layering in CRM, AML/CTF/fraud monitoring, compliance tools, etc., through APIs, can offer flexibility and allow PayTechs to work with best-in-class vendors for each function. But this strategy comes with significant trade-offs:

• Operational complexity: Managing dozens of vendors and interfaces can lead to a spaghetti-like architecture where each failure point must be monitored, tested, and secured individually.
• Weaker resilience: A fragmented stack increases downtime risk and complicates business continuity and disaster recovery efforts, especially in regulated environments.
• Compliance burden: Regulations like DORA (Digital Operational Resilience Act) in the EU place strict demands on ICT and third-party risk. Integrating numerous vendors can multiply compliance exposure and audit scope.
• Higher total cost of ownership: Licensing, integrating, and maintaining multiple systems—especially those with overlapping or poorly aligned data models—often proves more expensive over time than a unified system.

What does a comprehensive core banking solution consist of?

In contrast, a vertically integrated core banking solution, or in other words, a fully fledged ERP – one that includes pre-built modules for CRM, customer onboarding, AML/CTF screening, fraud detection, and even front-end channels – can streamline operations and simplify governance. While such solutions may offer less customisation, they are typically built with consistent data models, shared security layers, and native workflows that align with regulatory expectations. Such vertically integrated core banking solutions also reduce costs of ownership and operations, integration overhead and may accelerate time to market for new products.

Ultimately, PayTechs must decide which approach aligns with their product roadmap, risk appetite, and internal capabilities. But whichever strategy you pursue, the evaluation must extend beyond basic features to include ecosystem design, integration architecture, and compliance-readiness. Ask vendors directly: What is included out of the box? What requires third-party tools? How do they support resilience, monitoring, and control across the entire value chain?

Core banking solution deployment and scalability 

One of the earliest and most consequential decisions PayTechs must make is choosing the deployment model for their core banking solution, whether to host it in the cloud (public, private, or hybrid) or deploy it on-premises. This choice directly impacts scalability, operational flexibility, compliance posture, and long-term cost structure.

How does cloud hosting of a core banking solution work?

Cloud-native deployment is increasingly popular among fintech firms for good reason. It offers faster implementation, elastic scalability, and lower upfront infrastructure investment. These benefits align well with the growth trajectories of most PayTechs, especially those operating in dynamic or cross-border markets. A cloud platform can also accelerate product rollouts and simplify expansion to new geographies through global infrastructure footprints.

Yet cloud adoption is not without risk. European regulators – including the European Banking Authority (EBA) and the Financial Conduct Authority (FCA) – treat cloud hosting as a form of outsourcing of critical functions. Institutions remain fully responsible for governance, risk management, and compliance, regardless of the deployment model. This means vendor contracts must explicitly define responsibilities, audit rights, data residency, service level agreements, and exit strategies. Regulators expect firms to maintain control and oversight even in cloud environments, and this extends to security, availability, and operational resilience.

The shared responsibility model in cloud computing can create gaps if misunderstood. While the provider handles infrastructure-level protections (such as physical security or uptime of core services), PayTechs must still secure application configurations, access controls, data protection, and incident response. Compliance frameworks like DORA in the EU are increasingly focused on third-party ICT risk, requiring financial entities to ensure resilience and traceability across the supply chain, including cloud vendors.

How does on-premise deployment compare to cloud hosting?

On-premise deployment, in contrast, offers full control over infrastructure and data but at the cost of operational agility and higher capital and maintenance burdens. While some PayTechs may choose this route to satisfy local data sovereignty laws or internal governance policies, managing infrastructure and updates in-house can hinder speed and scalability.

In reality, many firms adopt a hybrid model—hosting core transactional services in the cloud, while retaining sensitive components or compliance-critical functions on-premise. This provides a balance between agility and control, though it also demands careful architecture planning to avoid fragmentation and resilience issues.

Ultimately, the right deployment model is not just a technical choice; it’s a strategic one. It must align with your operational model, regulatory obligations, and long-term risk appetite. When evaluating a core banking solution, ask not only if it can scale but how it scales securely and compliantly across jurisdictions. Deployment flexibility, vendor transparency, and operational resilience must all be part of that equation.

Legacy core banking solution vs PayTech-focused modern one

The legacy core banking solution market is dominated by a few large vendors whose platforms were originally built to serve traditional banks. These systems are proven at scale, often highly resilient, and designed with full-featured financial control in mind—robust general ledgers, configurable charts of accounts, audit trails, and compliance with mature accounting standards. However, they are also expensive, complex, and notoriously slow to deploy or customize. For a fast-moving PayTech firm, this can become a significant constraint.

In contrast, the newer generation of PayTech-focused core banking solutions promises speed, flexibility, and developer-friendly APIs. These solutions are often cloud-native, modular, and faster to implement—appealing traits for digital-first businesses. Yet in the pursuit of agility, many such core banking solutions sacrifice the depth and rigor that legacy systems offer in core financial functions. For example, some lack fully configurable double-entry general ledgers, granular financial reporting, or robust support for branch or multi-entity accounting, features that are non-negotiable for regulated operations or complex financial products.

This creates a strategic trade-off: while modern core banking solutions may accelerate time to market and simplify integration with other digital services (such as payments, identity, or compliance tools), they may not be suitable as the long-term financial system of record if their core architecture lacks maturity. In such cases, firms may end up retrofitting financial control through external tools – compromising data consistency, auditability, and control.

How should PayTechs evaluate modern vs legacy core banking solutions?

When evaluating any core banking solution, PayTechs should assess not just integration capabilities or front-end APIs, but whether the foundational accounting and risk primitives are truly in place. This includes support for multi-currency ledgers, journal entries, reconciliation processes, financial reporting, and accounting standard compliance (e.g. IFRS, GAAP).

Vendor due diligence is also critical. Beyond technical features, PayTechs should examine vendor responsiveness to regulatory changes, track record with real-world deployments, and ecosystem compatibility. Open APIs are necessary, but not sufficient. The core banking solution must be extensible without exposing the firm to excessive complexity or operational fragility.

In summary, while legacy systems are often too rigid and costly for PayTechs, modern alternatives must still meet the core expectations of a financial backbone. A lightweight or developer-friendly core banking solution that skips over the essentials—like proper financial control and auditability—can be just as risky as a bloated legacy system. The right solution balances modern architecture with deep, proven core capabilities.

Global adaptability of the core banking solution

For PayTechs operating across jurisdictions, global adaptability is not a luxury—it’s a necessity. A core banking solution must be able to flex with evolving local regulations, business models, and operational nuances without requiring constant redevelopment or vendor intervention. This is where configurability and modular architecture become critical differentiators.

Rather than hardcoding compliance logic or country-specific workflows, a well-designed core should support regional variation through parameter-driven configuration. This includes country-specific tax and financial reporting rules, sanction list integrations, accounting standard support (e.g. IFRS, UK GAAP), and localized KYC/AML requirements. Regulatory reporting under frameworks like the PSD2 or EMD2 (and soon PSD3) or similar must be supported as well.

A globally adaptable core banking solution allows PayTechs to enter new markets or respond to regulatory changes with minimal disruption. This means being able to:

• Define jurisdiction-specific AML/CTF rules and risk scoring models.
• Adjust onboarding workflows or product approval steps to align with local consumer protection laws.
• Localise data handling practices in compliance with privacy and data residency requirements (e.g. GDPR, BaFin’s data localization rules, or country-specific cloud laws).

Critically, this adaptability should not depend on extensive re-coding or vendor-led customisation. Core banking solutions designed with modular, loosely coupled components – as explored in Baseella’s modular architecture article – make it easier to introduce or adjust functionality without destabilising the core system. For example, you should be able to swap in a new sanctions screening module or update reporting logic for a new jurisdiction without rewriting the ledger or disrupting existing integrations.

How Can Core Banking Solutions Achieve True Global Adaptability?

Beyond flexibility, regulators increasingly expect PayTechs to demonstrate control and transparency across markets. A globally capable core banking solution should maintain detailed audit trails, enable process mapping, and support evidence-based oversight of compliance mechanisms. This includes the ability to log and report on regulatory interactions, customer risk profiles, and rule-based transaction reviews—all mapped to the local context.

Finally, your evaluation should consider whether the system can accommodate divergent compliance expectations without operational fragmentation. A truly international core banking solution will allow centralised oversight while respecting local constraints—supporting both global consistency and local autonomy.

In short, global adaptability is not just about being “multi-country.” It’s about being configurable at scale – meeting diverse regulatory requirements without undermining control, stability, or speed. A modular, policy-driven architecture is now a strategic asset, allowing PayTechs to expand and adapt without being trapped by rigid systems or excessive reliance on third-party developers.

Let’s discuss in more detail now the critical components of the modern core banking solution for PayTech firms, which must be supported via a vertically integrated core banking solution or third-party integrations. 

Ledger, chart of accounts, and accounting 

For PayTechs, the core banking solution must function as the single source of financial truth, accurately recording, reconciling, and reporting every transaction across the platform. This is not just about operational efficiency; it’s essential for financial integrity, auditability, and regulatory compliance.

How does a double-entry general ledger core banking solution work?

A well-designed system should offer a robust double-entry general ledger at its foundation, capturing all transactions with precision and supporting automated balancing and reconciliation. Whether you’re processing e-money flows, settlement instructions, or merchant payouts, every financial movement should be reflected transparently and in real time. Ideally, the system supports multiple ledgers or sub-ledgers to segment accounts by customer type, geography, business unit, or partner arrangements – critical for PayTechs operating across entities or jurisdictions.

What main parameters, apart from the general ledger, should be considered?

Multi-currency and multi-entity support is also fundamental. If your firm handles cross-border payments, FX, or operates in multiple legal entities, the core must enable real-time currency conversion, choice of multiple base FX rate and market FX rate providers, open currency position reporting, automated foreign currency positions revaluation, etc. 

Equally important is the system’s capacity to produce accurate financial reporting. This includes balance sheets, cash flow statements, and operational ledgers that meet internal control and external reporting standards. Whether reporting to a local tax authority, electronic money regulator, or payment scheme, your accounting module should offer exportable reports in standard formats, along with full audit trails for every adjustment or entry.

Accounting standards compliance must also be considered. The core banking solution should support frameworks such as IFRS or local GAAP, depending on where your entities are based. This requires a configurable chart of accounts, with the ability to adapt definitions as regulations evolve, without needing extensive vendor intervention or code rewrites.

Lastly, your accounting engine must be resilient enough to scale with your business and flexible enough to support operational nuances like wallet hierarchies, e-money issuance/redemption, or settlement flows between internal and external accounts. Many newer core banking solutions emphasise front-end agility but lack the financial controls needed for regulated or audited environments.

Payment Processing, Orchestration, and Connectivity

A core banking solution is only as valuable as its ability to seamlessly move money. For PayTechs, payment processing is not just about initiating or receiving transactions—it’s about how well the system integrates with relevant payment networks, banks, PSPs, supports real-time operations, and ensures visibility and control across the entire payment lifecycle.

What integrations should a core banking solution support?

Modern PayTech operations demand native connectivity to a wide array of payment schemes and infrastructure, including card networks (Visa, Mastercard), SEPA, Faster Payments, SWIFT, and local domestic clearing systems. The core banking solution must support key messaging standards such as ISO 20022 and interface with these systems in real time. Where native integrations are not available or PayTech is not a direct participant of the payment scheme, the system should expose well-documented APIs or modules to enable reliable connectivity through external banking partners and PSPs.

Why is payment orchestration important?

In this context, payment orchestration becomes increasingly important. A capable core banking solution should support the dynamic routing of payments across multiple providers and rails, based on business logic such as payment type, currency, cost, risk score, geography, etc. Orchestration also helps improve reliability and resilience by enabling failover, smart retries, and dynamic provider switching – all of which contribute to a smoother and more cost-effective payment experience for both the business and the end user.

Unlike traditional financial institutions that often rely on batch processing, PayTechs require continuous, real-time settlement and reconciliation. The core banking solution must enable end-to-end automation – from transaction initiation and validation to posting and final settlement – without manual intervention. This is critical not only for delivering modern user experiences but also for maintaining operational efficiency and alignment with scheme-level expectations for near-instant finality.

How should core banking solutions adapt to evolving payment types and market demands?

In evaluating a core banking solution’s capabilities, it is also essential to assess its support for emerging payment types, such as mobile wallets, account-to-account (A2A) payments, QR-based payments, or crypto-based settlement. While these may not all be in scope immediately, the core system should be extensible enough to adapt quickly as market demand shifts or regulatory frameworks, such as PSD2 and PSD3, evolve. Integration with orchestration layers further supports this flexibility by decoupling payment initiation from back-end processing logic, allowing for faster adaptation without major code changes.Another critical requirement is robust support for internal and interbank reconciliation. The system must be able to manage internal settlement flows, maintain clear journal entries, and provide accurate balancing across accounts and entities throughout the day. For PayTechs operating across multiple markets or legal entities, this functionality underpins financial control and accountability.

Finally, the system must generate comprehensive transaction logs and audit-ready reports, enabling full traceability from payment initiation through to final posting and settlement. These are not only operational necessities but also critical for meeting the expectations of regulators, payment schemes, and internal compliance functions.

Regulatory compliance 

Regulatory scrutiny of non-bank payment services providers has entered a new phase, globally. Across jurisdictions, electronic money institutions (EMIs), authorised payment institutions (APIs), money service businesses (MSBs), and cryptoasset service providers (CASPs) are now facing a rapidly intensifying compliance environment shaped by evolving risk profiles, new legislation, and heightened enforcement.

One prominent example is the UK National Risk Assessment 2025 (as disseminated in the PSP Lab article), which formally escalates money laundering risks for EMIs and APIs from medium to high, maintains the high-risk classification for MSBs, and introduces cryptoassets as a distinct and growing threat vector. This shift reflects a broader international trend: regulators worldwide are moving away from light-touch oversight and demanding more structured, proactive, and risk-based compliance frameworks from non-bank PayTechs. The increasing volume of enforcement actions, the introduction of crypto-specific regimes, and rising expectations around customer due diligence and transaction monitoring all point in the same direction.

Simply put, the days of treating compliance as a box-ticking exercise, or borrowing strategies from peers with similar licences, are over. Regulatory authorities are now aligned in holding non-bank PSPs to higher operational and governance standards. Failures in AML, CTF, or risk controls are no longer viewed as isolated missteps but as systemic weaknesses that demand corrective action.

In this context, compliance must be designed into your operations from the start, and your core banking solution must be an enabler, not a bottleneck.

What is the first line of defence of a core banking solution?

Robust onboarding processes are the first line of defence in preventing financial crime. The core banking solution, should support flexible onboarding workflows, including country-specific requirements, business type segmentation (e.g. individual, sole trader, SME), and configurable rules for approval, referral, or rejection. It must ensure all required customer data is captured and structured for downstream compliance use.

How Does Onboarding and Initial Risk Control Safeguard Core Banking Solutions?

After initial data collection, identity must be validated through external IDV providers. This includes biometric verification, document matching, and liveness checks. The core banking solution should support integration with IDV APIs, automatically process results, and flag any failed or risky verifications for manual review. All IDV outcomes should be retained and audit-ready.
Uploaded identity and address documents must be verified for authenticity and consistency. The system should detect expired or manipulated documents, check regional formatting, and validate document security features – either directly or via external authentication tools. These checks should be linked to the customer record and included in future re-verification cycles.

Upon onboarding, every customer should be assigned a dynamic risk score based on factors like customer type, nationality, jurisdiction, business sector, onboarding channel, PEP exposure, and intended product/services usage. The core banking solution should support a configurable scoring engine that adjusts scores over time based on activity, reviews, or changes in profile data. Higher scores should automatically trigger enhanced due diligence steps.

What about continuous screening and monitoring?

The core banking solution must conduct continuous screening against active sanctions lists, including UN, OFAC, OFSI, EU, and other relevant international databases. Sanctions checks should occur at onboarding, daily, and on every transactional interaction. Matched entries should be flagged for investigation, with transaction blocking or escalation workflows clearly defined.

Identifying politically exposed persons is a standard AML obligation. The core banking solution must screen for both direct and indirect PEP associations and update these in real time as new data becomes available. PEP status should influence both the customer risk score and review frequency, with appropriate controls for ongoing monitoring.

Real-time monitoring for negative news, enforcement actions, or reputational risk is essential. The core banking solution should support integration with adverse media feeds or databases, automatically updating risk profiles when relevant hits are detected. All alerts should be logged and routed into compliance case management workflows as needed.

The core banking solution must assess risk on every transaction, not just at the customer level. Transaction risk scoring should consider behavioural patterns (e.g. transaction size, speed, volume), geographic routing, counterparties, and deviation from baseline activity. Scores should inform real-time decisions, such as holding, escalating, or clearing a transaction.

Beyond scoring, the core banking solution must support a flexible, rule-based engine for detecting suspicious patterns. Compliance teams should be able to define and adjust rules based on thresholds, logic (e.g. structuring, velocity, round-tripping), and combinations of attributes. Rules should trigger alerts, generate cases, and be fully auditable with timestamped logs and outcomes.

A compliance-ready core banking solution must also support full auditability and reporting across all these layers—customer onboarding, document validation, sanctions checks, and transaction events. It must allow compliance teams to demonstrate control, respond to regulatory audits, and adapt rules and models as regulations evolve.

Customer Relationship Management (CRM) and user experience

Customer experience is increasingly a competitive differentiator for PayTechs—and effective customer management depends on having the right CRM capabilities embedded in, or integrated with, the core banking solution. While CRM is often viewed through a sales or marketing lens, it also plays a crucial role in compliance, user lifecycle management, and operational efficiency.

The foundation of any CRM strategy is a consolidated customer view. Your core system should be able to bring together a customer’s full profile, including accounts, transactions, KYC status, documents uploaded during the onboarding or lifecycle of the customer, communication history (support tickets, messages), and channel activity across mobile, web, and API interfaces. This unified view enables better support, faster resolution times, personalised offers, and clearer insight into customer behaviour.

How can a modern core banking solution improve customer management?

Modern CRM modules of the core banking solutions or an integration of such, should support customer segmentation, allowing you to classify users by risk profile, region, business type, activity level, or product usage. This enables targeted communications, tailored product offers, and better operational oversight. For example, being able to distinguish between high-activity SMEs and low-volume retail customers allows for smarter prioritisation of service and marketing.

Just as important is omnichannel support. PayTechs often engage customers across multiple touchpoints—mobile apps, online portals, chat, email, or third-party integrations. Your CRM should allow coordinated messaging and activity tracking across all of them. Notifications, alerts, service responses, and updates should flow consistently across these channels, with the customer always seeing a coherent and up-to-date picture.

A well-integrated CRM also enables customer lifecycle automation. This includes onboarding journeys, periodic re-verification prompts, churn risk detection, and upsell triggers. For instance, if a business account hits a predefined balance threshold, the system could prompt a relationship manager or trigger a product offer—while ensuring all actions respect opt-in preferences and are logged for audit.

How can CRM support compliance without hindering customer experience in core banking solution?

Importantly, CRM activity must align with compliance and data protection expectations. While CRM is not a regulatory function by name, it interacts directly with data governance, KYC status, documentation of the customer, consent management, and marketing conduct rules. Your system should include features to store and enforce contact preferences, maintain audit trails of communications, and restrict outreach based on KYC/AML status or user consents captured during onboarding. For example, no marketing campaign should override “do not contact” flags or expose financial information to unauthorised users.

The CRM module should also support customer-level reporting that benefits both business and compliance functions. Examples include transaction anomaly reports, demographic breakdowns, or usage trends by region or risk class. These insights not only guide commercial strategy but also support regulatory reporting and internal governance, such as fair treatment assessments and board-level metrics (e.g. churn rate, customer satisfaction scores, complaint volumes).

Finally, look for CRM and customer experience tools that can power secure, self-service engagement. Customer portals or mobile apps linked to the core banking solution should allow users to view balances, download statements, manage consents, and raise service requests—all gated through strong authentication and identity checks. This reduces support overhead and enhances customer satisfaction, while preserving compliance integrity.

Users and access control

Managing users and permissions is a foundational element of secure and compliant core banking solutions. In a PayTech environment, where both internal users and external systems interact with sensitive data and financial workflows, access control must be precise, enforceable, and auditable.

How user access should be managed in a robust core banking solution?

A robust core banking solution should offer granular, role-based access control (RBAC). Internal users—such as operations staff, compliance officers, finance teams, and customer support—must only be able to access the functions necessary for their roles. The core banking solution should support configurable roles, enforce segregation of duties, and prevent privilege escalation that could lead to fraud or operational risk. For example, the same user should not be able to initiate and approve fund transfers or alter and validate compliance overrides. Same concerns the notifications of the CRM system, they should only reach those roles for whom they are intended for.

Access control must also extend to authentication and session security. The core banking solution should support modern identity and access management (IAM) protocols such as SAML, OAuth, and multi-factor authentication. Administrators must be able to configure password policies, apply login attempt restrictions, and automatically time out idle sessions to limit exposure.

Critically, the core banking solution must provide comprehensive audit logging. All user activity, including data access, transaction approvals, and configuration changes, should be timestamped, attributable, and tamper-proof. These logs are essential for internal oversight, regulatory audits, and forensic investigations in the event of fraud or breaches.

What about sensitive payment data protection?

Sensitive payment data protection is a key compliance and security concern, particularly as PayTechs often handle data subject to local and cross-border data protection laws. The core banking solution must protect customer login credentials and SCA (strong customer authentication) mechanisms, hash passwords, mask payment card PAN, sensitive fields, such as payment account numbers, personal identifiers, and transaction metadata, through strong encryption, data masking in user interfaces and logs, and fine-grained access restrictions. Only authorised roles should be able to view or act on this information, and data must remain protected both at rest and in transit. Additionally, the system should log and monitor access to sensitive fields, providing transparency into who viewed or modified what, and when.

User management also extends beyond human users. External systems and digital channels – mobile apps, partner APIs, and portals – must authenticate securely and follow strict authorisation rules. For instance, an API client should not be able to access data or functions beyond its intended scope. PayTechs offering customer or merchant portals must enforce secure session handling, customer-specific data filtering, and explicit consent capture for sensitive operations.

Access control is also essential for enabling compliance operations. Compliance analysts may need read-only access to customer profiles and transaction histories, while onboarding teams require edit rights on KYC documents and risk scores. Your core banking solution should enable role-specific workflows, such as approvals, reviews, and escalations, without compromising the principle of least privilege.

Architecture and technology stack

The architecture of your core banking solution isn’t just a technical detail—it determines how well your platform scales, adapts, integrates, and recovers under stress. For PayTechs, a well-designed architecture is essential to support rapid product innovation, operational resilience, and regulatory alignment.

First, assess whether the core banking solution is built cloud-native, not simply hosted in the cloud. A true cloud-native system is containerised, modular, and based on microservices—enabling elastic scalability, fault isolation, and faster updates. In contrast, legacy systems “lifted” into cloud environments often retain monolithic structures that hinder agility and resilience.

Many modern deployments favour hybrid architectures, combining public or private cloud infrastructure with on-premise components for specific regulatory, latency, or security requirements. Regardless of the model, ensure your cloud provider complies with industry security certifications such as ISO 27001 and supports data sovereignty, portability, and auditability through clearly defined contractual terms.

Key considerations for integration, resilience, and sustainability

From an application design perspective, look for a modular, API-first architecture. This makes it easier to integrate external services—such as identity verification, fraud detection, or analytics platforms—without destabilising the core. The core banking solution should support well-documented RESTful APIs and, where applicable, financial messaging standards like ISO 20022 to ensure compatibility with payment networks and partner ecosystems.

Operational resilience must be built into the technology stack. The system should support high-availability (HA) and disaster recovery (DR) configurations out of the box, such as active-active deployments, automated failover, and routine backup procedures. Downtime or data loss is unacceptable in a real-time financial system, so resilience planning must be a fundamental design principle, not a bolt-on feature.

Security and risk management are also core architectural concerns. The tech stack should allow for rapid patching, regular vulnerability scanning, and penetration testing without service disruption. PayTechs must be able to respond quickly to emerging threats or compliance changes, which means infrastructure must support rolling updates, sandbox testing, and isolated environments for development and staging.

On the data layer, ensure the core includes a robust and well-documented database model. This typically means a high-performance relational database, potentially complemented by NoSQL components for analytics or metadata. The system should support secure data access, audit logging, and structured exports in formats like CSV or XML to facilitate reporting, compliance checks, and regulatory submissions.

Lastly, your core banking solution technology stack must be sustainable from a talent and vendor support perspective. Ensure the core banking solution is built on widely adopted technologies (e.g. Java, .NET, PostgreSQL, AWS, Azure) that your provider’s team, your internal team, or your implementation partner, can maintain. Avoid overly niche or proprietary architectures that create long-term vendor lock-in or talent scarcity.

Comprehensive security and data protection in core banking solutions

Security is non-negotiable in core banking solutions, especially for PayTechs operating in regulated environments, handling financial data, customer identities, and transaction flows. Core banking solution must be designed with a layered, risk-based security approach, aligning with regulatory expectations and industry best practices.

Begin by evaluating the core banking solution’s information security controls. The system must support strong encryption—for data both at rest and in transit—alongside secure key management, intrusion detection, and robust network-level protections such as firewalls and IP whitelisting. It should automatically log security events and allow configuration of alerts for suspicious access, failed logins, or privilege changes. Integration with SIEM (Security Information and Event Management) tools is essential to ensure real-time visibility and incident response capabilities.

A strong core banking solution must also demonstrate cyber resilience. This includes built-in support for failover, high availability, and disaster recovery (e.g. active-active architecture or rapid switchover to secondary sites). Vendors should perform regular security assessments, penetration tests, and vulnerability scans, and be transparent with their results and remediation processes. Systems should be designed to continue operating under stress—whether facing cyberattacks, infrastructure failures, or third-party outages.

If the core banking solution is cloud-based, understand the shared responsibility model. While cloud providers typically manage the physical infrastructure, responsibility for application-level security, data protection, and access control remains with the PayTech. Ensure that contracts clearly define roles, responsibilities, and audit rights. Your vendor should provide security attestations such as ISO 27001, and you should have visibility into their operational controls and incident response procedures.

What about external providers?

Security doesn’t end at the core banking solution; it must extend to third-party integrations. Payment gateways, KYC modules, fraud detection services, and other API-connected components all introduce risk. The system should manage access privileges, segment responsibilities, and support end-to-end encryption and tokenisation where required. Regulatory guidance (such as from the EBA) requires that any outsourced function includes contractual security objectives and provisions for continuous monitoring.

PayTechs must also ensure strong protection of sensitive data, particularly customer credentials, SCA, payment details and personal identifiers. The core banking solution should support data masking in logs and user interfaces, secure data backup and recovery mechanisms, and role-based access to critical information. Sensitive fields, such as customer account numbers, payment instructions, or identity documents, should only be accessible to authorised roles and logged when accessed.

Security must be embedded into every layer of the architecture—from API gateways and authentication flows to data storage and reporting. Firms must be able to classify information assets by sensitivity and apply appropriate safeguards, including encryption, access control, and monitoring. The core banking solution should log all critical actions—such as transaction authorisations, rate changes, and configuration updates—and make these logs available for audit and investigation.

How Baseella Helps You Choose with Confidence

Selecting the right core banking solution is one of the most consequential decisions a PayTech firm will make. When evaluating the core banking solution, you want to cut through vendor noise and surface what truly matters—resilience, compliance readiness, architectural integrity, and operational alignment.

Rather than relying on sales demos or glossy feature lists, we offer a structured, vendor-agnostic approach grounded in both regulatory standards and real-world implementation experience. Our developed evaluation framework enables you to focus on the essentials: from financial control and transaction architecture to risk scoring, security, and future scalability. Whether you’re launching a new PayTech venture or replacing an ageing system, we help you ask the right questions, identify red flags, and align the solution with your growth plans and regulatory obligations.

To support your evaluation process, we’ve developed a Core Banking Solution Evaluation Questionnaire. This practical tool helps your internal stakeholders assess any core banking solution (including Baseella) across key dimensions such as financial control, compliance, payments, user access, security, CRM, and architectural design. This structured checklist maps directly to all the key areas explored in this article: accounting, compliance, user roles, security, payments, architecture, CRM, and beyond.

Evaluate with structure, choose with confidence.

Find the Core Banking Solution Assessment Questionnaire below to guide your core banking solution assessment for PayTech firm and make a well-informed decision—whether you’re evaluating Baseella or any other provider.