Why Change Cores?

by Bart Narter, February 2, 2011
Operations/ Benchmarking
Global, Asia-Pacific, EMEA, Latin America, North America

Abstract

After years and years (and years) of very little movement in core banking in North America, Celent is now observing activity in both the United States and Canada. A massive movement occurred in the Australian market, where three of the top four banks are switching core systems.

In this report, Celent expounds upon these issues so that the reader can consider whether a core banking migration is appropriate. These issues are coming to the fore.

Celent has delineated three categories of reasons to move core:

  • Business issues
  • Technical issues with the core itself
  • Integration issues

“I think the dam has burst in Canada, and all the key players are giving serious thought to core migrations. In the United States, the jury is sitll out. If there are three successful migrations in the US at Citi, Union Bank, and BBVA Compass, that will trigger a tipping point," says Bart Narter, author of the report and Senior Vice President of the Banking Group at Celent.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Introduction

4

Business Issues

6

 

Mergers and Acquisitions

6

 

Regulatory Dynamics

7

 

Change in Business Model

7

 

Competitive Dynamics

8

 

International Capabilities

8

Technical Issues with the Core

9

 

Scalability

9

 

Internal System with No Support

9

 

External System with Limited Support

10

 

Real Time Requirements in a Batch Core

10

Channel and Integration Issues

11

 

Real Time Channels

11

 

7 x 24 Service

11

 

Channel Proliferation

12

Conclusion

14

Leveraging Celent’s Expertise

15

 

Support for Financial Institutions

15

 

Support for Vendors

15

Related Celent Research

16

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