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Spanish banks more efficient, says Datamonitor

04 July 2002  |  1398 views  |  0 Spanish banks more efficient, says Datamonitor

Spanish retail banks are way ahead of their European counterparts when it comes to implementing packaged core banking systems, according to a new report from Datamonitor.

The report, "Core Systems in European Retail Banking 2001-2005," reveals that at 16.9 per cent, Spanish retail banks' share of IT spend on core systems is the lowest in Europe. France and the UK spend 21 per cent and 19.8 per cent of their IT budgets on developing their core systems, respectively.

The study shows the Spanish retail banking community has replaced its core legacy systems with packaged core systems designed and maintained by a third party vendor, leading to significant cost savings and operational efficiencies.

Markus Siivola, Datamonitor technology analyst, says: "By doing some heavy investment in packaged core systems over a ten year period, the Spanish retail banking community has surged ahead of its European counterparts providing them with highly sophisticated operational efficiency. The Spanish experience will be a model for many European countries."

Alnova, a wholly-owned subsidiary of Accenture, is primarily the vendor that has been doing a large part of the core systems replacement in Spain, and has a total of 22 banks as its customers in Spain alone and in total 96 worldwide, in 18 different countries.

Elsewhere in Europe, SAP is introducing a core system offering for large banks in Germany which is being developed and implemented concurrently in Deutsche Postbank and UBS. It appears the other German major retail banks are waiting to assess SAP's offering before they will consider a packaged core system from anyone else.

Due to this potential, Datamonitor expects the packaged core systems licence market in Germany to increase at a CAGR of 13 per cent over the next four years.

In the UK, banks have shied away from packaged core systems on a larger scale, with the UK currently accounting for only 10% of the European packaged core system licence market. Part of the reason for the conservative approach that UK banks have taken is due to the intense consolidation of the banking industry and the other major IT projects that have occupied its attentions, says Datamonitor. In addition, the memory of failed implementations in the past still haunts IT directors, leading to a situation where no one is keen to take the first plunge, notes the research company.

Siivola concludes: "European core systems still have a long way to go and some banks will seem to forever remain unconvinced of the benefits of a packaged core system. Only recently, a Scandinavian bank decided to design a brand new core system internally. This is despite the fact that an internal IT project will bear a significant cost in terms of time and money, and on average half of internal IT projects fail."

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