Banks Overhaul SystemsBanks Overhaul Systems
Banks worldwide are growing increasingly dissatisfied with their aging core banking systems
September 6, 2005
COPENHAGEN -- Banks worldwide are growing increasingly dissatisfied with their aging core banking systems and plan to update their core technology architecture to remain competitive, according to a global survey sponsored by Accenture (NYSE: ACN - News) and SAP AG (NYSE: SAP - News). The results of the study were released today at Sibos 2005, the financial industry's leading annual forum held in Copenhagen, Denmark.
Seventy percent of bank executives surveyed said flexibility was the biggest problem hindering the success of their core banking systems. Almost half of the bank executives surveyed also cited high maintenance costs and lack of system integration as areas that would impede their ability to remain competitive. To address these concerns, a significant number of banks surveyed are planning core banking system replacements within the next five years -- 30 percent in Europe, more than 35 percent in Asia Pacific and more than 20 percent in North America.
"Regardless of geography, core banking system maintenance is the albatross in banks' IT departments," said Octavio Marenzi, CEO, Celent. "Fierce competitive dynamics and the necessity to keep pace with new products and to strengthen customer relationships will motivate banks to significantly rethink and revamp their IT architecture over the next decade."
SAP and Accenture entered into an alliance in the Financial Services industry in 2003 and recently co-sponsored the study, titled "Redefining Core Banking," to examine the current status, impact and plans for transformation of core banking systems. The comprehensive global study is one of the first to gather the views of high-level bank business and information technology (IT) executives, as well as branch-level employees, who are the primary users of core banking systems.
Nearly 1,500 bankers around the world participated in the study, with 43 of the top 100 banks represented. The survey included banks of all sizes in Europe (40 percent), Asia Pacific (30 percent) and North America (30 percent). For the purposes of the study, core banking was defined as the sum of all IT components allowing banks to manage basic financial products and services, including data on clients, deposit accounts, loans, mortgages, payment transactions and credit cards.
Core system issues resonate with branch employees. Throughout the branch survey, this group identified the day-to-day issues they face using old systems that affect their customer interactions.
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