Why Your Core Banking Platform Is the Make-or-Break Factor in a PSP/EMI License Application

Obtaining a Payment Service Provider (PSP) or Electronic Money Institution (EMI) license is a complex process that goes far beyond compliance paperwork and business plans. One crucial, yet often overlooked element of a successful application is the core banking platform, which serves as tangible proof of operational readiness and regulatory alignment. In this article, we’ll explore why selecting and implementing the right core banking platform before submitting your licence application can dramatically improve your chances of approval and ensure your business is built on a compliant, future-ready foundation.

Core Banking Platform – The Backbone of Your PSP License Application

A core banking platform is far more than just a technological platform. It is the beating heart of your financial operations, powering account management, transaction processing, reconciliation, and reporting. More importantly, for regulatory authorities, it represents proof of operational readiness. It is a tangible sign that your business is “fully organised, ready and willing” to begin providing regulated payment or e-money services.

From a licensing perspective, the technology infrastructure you choose is not just a supporting tool; it is a critical regulatory component. Supervisory bodies expect applicants to demonstrate that their technology stack, particularly their core banking engine, aligns with the stringent requirements on data protection, transaction monitoring, safeguarding, risk management, and business continuity. Without this foundation, even the most robust compliance framework can appear incomplete.

In simple terms, your core banking platform is the backbone of both your business model and your licence application. Selecting the right system, and the right development partner behind it, can make the difference between a swift, successful authorisation and years of costly delays or additional regulator queries.

Why It Is Important to Have a Core Banking Platform Selected Before Submitting the PSP License Application

Before submitting a PSP license application, for example, for a Payment Institution (PI) or Electronic Money Institution (EMI) license, it is essential to have a core banking platform already selected, clearly defined in the application documentation, deployed and tested. Regulators want to see that the applicant is not only compliant on paper but also technically and operationally ready to start providing payment or e-money services immediately after authorisation.

In the words often used by supervisory authorities like the FCA, the applicant must be “fully organised, ready and willing” to begin operations. This means that by the time a PSP license application is submitted, all critical components of the operational setup should be in place or at least contracted and documented. The core banking platform sits at the heart of this readiness. It demonstrates to the regulator that the company has made practical decisions about how it will process payments, manage safeguarding of client funds, manage risk and compliance, and ensure business continuity.

Submitting a PSP license application without a clearly identified core banking solution can raise questions about the seriousness of the applicant’s intentions or its ability to deliver the proposed services. Regulators often request detailed information about IT systems, compliance capabilities, business continuity, and data protection measures during the assessment process. If the applicant cannot provide this information because the technology provider has not yet been chosen, the process will likely stall, causing unnecessary delays.

Having a selected core banking platform also allows the applicant to build more accurate policies and procedures. Security, compliance, transaction monitoring, and operational workflows can be described in a way that reflects the actual system that will be used in practice. This gives the regulator confidence that the business model and technology stack are consistent and well thought out in line with the laws and regulatory guidance. Moreover, it allows the PSP to start the operations immediately once the license is granted, as the risk management framework that the company developed reflects the operational realities and capabilities of the core banking platform.

In short, choosing the core banking platform before applying for a license is not only a strategic step for operational planning but also a regulatory necessity. It shows commitment, readiness, and maturity – three qualities every regulator looks for in a successful applicant.

How the Core Banking Platform  Shapes the Information Technology Part of the Application

A significant part of a PI or EMI license application focuses on information technology. Regulators expect applicants to demonstrate a clear understanding of how their systems are designed, secured, and managed. In fact, many sections of the application directly depend on information provided by or related to the core banking platform.

Areas such as IT security policies, data protection, and access control are all built around the technical architecture of the system. The regulator will want to know how sensitive payment data is handled, stored, and encrypted, and what measures are in place to prevent unauthorised access. Role-based access control (RBAC), immutable logs, audit trails, and permissions management are key features that must be demonstrated as part of the system’s setup.

The same applies to other mandatory components of the application, such as safeguarding and reconciliation. These depend on how the core banking platform separates and tracks client funds, generates reports, and integrates with safeguarding accounts. Without a defined system, it becomes difficult to explain how these vital processes will work in practice.

Another critical part is business continuity and disaster recovery. The regulator will expect to see how data backups, redundancy, and recovery procedures are implemented. The core banking platform plays a central role here, as it determines the actual technical capability of the company to maintain service availability and integrity in case of disruption.

Compliance integrations, transaction monitoring, and financial and management reporting are also closely linked to the system’s functions. The regulator will assess whether the applicant’s chosen system supports necessary controls such as biometric identification, ID authentication, PEP, sanctions, adverse media screening, risk scoring of the customer and transactions, transaction monitoring, suspicious transaction alerts, and real-time reporting to management and regulators.

In essence, all IT-related policies and controls, and every other policy and control described in the license application, depend on the features and capabilities of the core banking platform. Having a robust, well-documented, and secure platform not only makes these sections easier to complete but also demonstrates to the regulator that the business is technically prepared to operate safely and efficiently.

The Importance of the Core Banking Platform Developer in Supporting the Application

Choosing the right core banking platform is only part of the equation. Equally important is the developer or provider behind it. During the licensing process, regulators often request detailed explanations about how the system operates, how it ensures security, and how it integrates with other components of the business. These are highly technical questions that can only be accurately answered by the developer or the team that built the platform.

A reliable core banking platform provider should be ready to supply all necessary technical documentation, including system architecture, data flow diagrams, security procedures, and audit controls. Having this information prepared in advance helps the applicant respond quickly and precisely to regulator queries, reducing the risk of delays during the review process.

Even better, an experienced provider can assist in drafting or reviewing the IT and operational policies that form part of the application. Because they know their system inside out, they can ensure that your documentation accurately reflects how the platform functions in practice. This can include sections on data protection, security management, business continuity, and transaction monitoring.

A knowledgeable developer can also anticipate the type of questions regulators tend to ask about technology setups and help you prepare compliant responses. This kind of collaboration not only strengthens the quality of your application but also demonstrates to the regulator that you are working with a professional and established technology partner who understands the expectations of the licensing process.

In short, the involvement of the core banking platform developer is crucial. Their expertise can fill the technical knowledge gaps that often exist within newly established financial institutions, and their active participation can significantly increase the chances of a smooth and successful authorisation.

Why Collaboration with a Developer Who Understands Licensing Can Make or Break the Application

Not all technology providers understand what it takes to obtain a financial license. Many focus solely on product features and performance, while overlooking the specific regulatory expectations that come with operating as a Payment Institution or Electronic Money Institution. This is where collaboration with a core banking platform developer who understands the licensing process and regulatory compliance requirements becomes a decisive factor.

When a developer has prior experience supporting clients through authorisation, they know exactly what information regulators will expect and how to present it. They can help structure documentation, prepare detailed system descriptions, and provide compliance-relevant technical data that satisfies the regulator’s questions. This insight can save weeks or even months of back-and-forth communication and prevent the application from being delayed due to incomplete or unclear information.

Such collaboration also ensures that the system’s configuration aligns with regulatory requirements from day one. This includes accounting policies, how safeguarding is handled, how reporting and reconciliation are performed, and how transaction monitoring and AML features are embedded. A developer familiar with these needs can guide the applicant to set up the system in a way that fully supports the compliance framework.

On the other hand, working with a developer who lacks regulatory understanding can create serious problems. Misaligned documentation, missing technical details, or incorrect assumptions about security or reporting standards can lead to regulator queries or even rejection of the application. The cost of correcting these mistakes later is often much higher than investing in the right partnership from the start.

Ultimately, the collaboration between the applicant and a knowledgeable core banking platform developer forms one of the cornerstones of a successful license application. A developer who knows what it takes to meet regulatory expectations is not just a software vendor but a strategic partner in achieving authorisation and long-term operational success.

Why a Full-Stack Core Banking Platform Increases the Chances of License Success

When preparing for a PI or EMI license, one of the most strategic decisions is whether to build a custom system in-house, use a lean core banking solution, or adopt a full-stack core banking platform. While some startups are tempted to develop their own systems to accommodate unique features of their business model and maintain control, experience shows that a full-stack, ready-to-deploy solution significantly improves both operational efficiency and licensing outcomes.

A full-stack core banking platform offers predictable operating costs, faster deployment, and eliminates the need to maintain an internal IT development team. This is particularly important in the licensing phase, when regulators expect applicants to demonstrate operational readiness, not just intent. Having a proven, functioning system in place sends a clear message that the business can start operating immediately once the license is granted.

In-house or lean systems, on the other hand, often face issues of incomplete documentation, lack of audit trails, and insufficient testing or certification. Regulators may view such systems as unproven or risky, especially if the applicant cannot demonstrate adequate controls for data protection, reconciliation, or safeguarding. The time and resources required to bring an internally developed system up to regulatory standards can also cause significant delays in the authorisation process.

A full-stack solution, already designed for regulated PSPs, typically includes all essential modules such as onboarding, customer-facing apps, account management, payment processing, AML and KYC integrations, financial reporting, and compliance tools. This allows applicants to present a well-structured, consistent, and regulator-ready technology setup from the beginning.

In addition, using a full-stack core banking platform gives the applicant access to continuous system updates, maintenance, and support, ensuring that compliance and security standards remain up to date even after authorisation.

For regulators, this level of maturity and predictability builds confidence in the applicant’s ability to manage risk and deliver services securely and efficiently. For applicants, it removes the burden of technical uncertainty and lets them focus on building their business and compliance framework.

Example: Lessons from Revolut’s Audit Challenges

Revolut’s experience offers a useful reminder of the importance of a unified and transparent core banking and reporting system. Despite its scale and success, the company faced delays in publishing audited financial statements for 2021 after its auditors cited challenges in verifying parts of its revenue data. The issues stemmed from data reconciliation difficulties across multiple internal systems, highlighting the risks of using fragmented infrastructures.

For smaller or newly established payment institutions, such problems could have even more serious implications, potentially delaying authorisation or triggering additional regulatory scrutiny. A well-integrated, full-stack core banking platform avoids these pitfalls by maintaining consistent data flows and providing complete audit trails across all financial and operational functions.

Why an Outsourced Core Banking Platform Is More Secure

Security is one of the main areas of concern for both regulators and payment and e-money institutions. An outsourced core banking platform, when provided by a reputable and experienced vendor, is often more secure and reliable than an in-house or newly built solution. This is because such systems are already tested, audited, and used by multiple regulated institutions, which means their security controls and operational procedures have been proven in practice.

Outsourced core banking platforms are typically built with strict security frameworks that include regular penetration testing, vulnerability assessments, and independent security certifications. These measures ensure that the system complies with high industry standards such as ISO 27001, PCI DSS, and GDPR. In most cases, these certifications and audit reports can be shared with the regulator as part of the license application, helping to demonstrate compliance with IT and data protection requirements.

Another important advantage of outsourced systems is that they come with built-in processes for backups, redundancy, and disaster recovery. This allows applicants to confidently present their business continuity and data recovery procedures during the licensing process without having to design and maintain these complex mechanisms internally and comply with operational resilience requirements.

By outsourcing, institutions also benefit from continuous monitoring, patching, and updates that are managed by professionals dedicated to maintaining system security. This ensures that vulnerabilities are addressed quickly, and that the system remains aligned with evolving regulatory expectations and technological standards.

From a regulator’s perspective, a proven and widely used outsourced system reduces operational and security risks associated with new or untested technology. It shows that the applicant is relying on a trusted infrastructure with established controls, rather than experimenting with an unverified internal build.

In short, outsourcing the core banking platform to a specialised provider offers a higher level of security, resilience, and regulatory assurance. It allows applicants to focus on their core business while relying on a platform that meets the demanding technical and compliance standards expected of regulated payment institutions.

Why Baseella Is the Right Choice for a Successful License Application

Securing a PI or EMI license requires more than just a solid business plan and compliance framework. It demands a complete operational setup that demonstrates readiness, reliability, and a clear understanding of regulatory expectations. At the centre of that setup lies the core banking platform, the foundation on which every key process, from safeguarding to reporting, is built.

Selecting the right system and the right partner behind it can significantly influence the outcome of your license application. A proven, full-stack, and secure platform shows regulators that your business is capable of managing payments, protecting data, and maintaining compliance from day one. Partnering with a developer who understands the licensing process ensures that your application is technically sound, well-documented, and aligned with the regulator’s expectations.

Baseella stands out in this respect. It is not just another technology provider, but a solution developed by regulatory compliance professionals – the same founders of PSP Lab who have guided numerous clients through successful license applications across Europe and the UK. This combination of deep regulatory expertise and advanced technology makes Baseella uniquely positioned to support payment institutions and e-money companies in achieving authorisation and building sustainable operations.

With Baseella, applicants gain access to a core banking platform designed with compliance at its core, supported by a team that understands both the technical and regulatory dimensions of the licensing journey. It is a partnership that brings confidence, readiness, and efficiency to one of the most critical stages of building a regulated financial business.