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  5. Three Case Studies in Core Banking Systems Replacement

Three Case Studies in Core Banking Systems Replacement

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8 March 2004

Abstract

Paris, France 8th March 2004

Case Studies in Core Banking Systems Replacement

In a new study, Celent examines three banks that have made the decision to replace their most vital information systems. Celent finds that such projects at large banks cost in excess of 250 million.

"Large banks who have decided to replace their core systems remain exceedingly rare. However, there are a growing number of institutions moving in this direction" according to Octavio Marenzi, author of the report.

The report finds that such projects cost in the hundreds of millions of euros at large institutions and even more, depending on the current systems architecture and complexity of the businesses that the bank is involved in. As much as half of the overall cost savings are not generated by reductions in IT expenses, but rather through improvements in efficiency in back office operations.

The cost savings generated by such projects, when done correctly, can represent as much as five to eight percent of the total operating budget of the bank. This represents a significant competitive advantage.

The banks feature in this report include:

A is available online.

Santander is migrating all of the groups core systems onto a single platform and then plans to develop an entirely new Java-based application in-house. The total IT investment for this project is about 250 million. Santander expects to reap savings of about 250 million annually.
Postbank is the largest retail bank in Germany and has been working with SAP to create a new core banking system. Postbank anticipates total investments of about 300 million and is already achieving annual savings of about 50 million.
ABN Amro's Indian subsidiary selected Infosys as the vendor to phase out an older solution. Interestingly, ABN Amro has been able to achieve considerable cost savings in operations, and has also created some innovative additions.

of Celent Communications' Wholesale Banking and Retail Banking research services can download the report electronically by clicking on the icon to the left. Non-members should contact info@celent.com for more information.

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