Banks worldwide are increasingly unhappy with their core banking platforms, but only around a third are planning systems replacements within the next five years, according to a study conducted by Celent and released by Accenture and SAP at Sibos.
The research shows that although there is growing dissatisfaction with core banking systems, only 30% of European respondents and 20% of US respondents are planning a systems upgrade in the next five years, although the figure is slightly higher in Asia Pacific at 35%.
A survey of 147 senior executives from 70 banks found that lack of flexibility in ageing systems was the biggest problem, cited by 70% of respondents, followed by high maintenance costs and poor integration. The lack of flexibility is blamed on old systems built on the wrong technology for future growth, and customised systems that are difficult to change and expensive to maintain.
Commenting on the research, Octavio Marenzi, CEO, Celent, says: "Regardless of geography, core banking system maintenance is the albatross in banks' IT departments."
Almost half of the executives cited cost as a major concern with core banking systems. The poll found that banks spend half of their entire IT budgets on core systems, with a large portion of this spending slated for development work.
The research also found that core system issues resonate with branch employees. A separate branch survey conducted for the study found that branch employees spend more than 40% of their time on back-office activities. Fifty percent of branch employees agreed that frequent and unwanted delays were the most common processing issues. Other gripes included inconsistent customer data.
Jean-Marc Ollagnier, global managing partner of Accenture's Financial Services Solutions group, says the survey highlights the need for core systems that are flexible, robust, future-oriented IT architecture that is service-oriented.
"This component approach, replacing unnecessarily complex IT systems, can allow for more optimal IT alignment with the business-operating model and can allow for future flexibility in sourcing decisions," says Ollagnier.