More banks upgrade core systems
In many ways, core banking systems are like mainframe computers.
People want to deride them as being artifacts of another era, but the reality is that they have been retooled for modern use and in many ways represent a solid investment for the CIO. We're now seeing more banks opt to invest in their core systems. Vendors seem to be sensing a more favorable climate.
Misys, for example, says demand is on the rise for its core services. And a recent survey from Bank Systems & Technology has found that core systems are currently the biggest area of IT spending, with more than more than 36 percent of respondents saying that such systems represents their biggest spending item, followed by mobile banking and the customer experience. Budgetary constraints in recent years most likely put a lot of projects on the back burner, so we may be experiencing a burst of pent-up demand.
A Celent analyst tells BTN, "Historically, transformations in the U.S. and Europe have stood at around 1-2 percent - considerably lower than the rest of the world. Currently, we're seeing that number rise to around 4-5 percent. It's not considerably higher this year, but considering how many banks there are in the U.S., this represents a lot of banks."
The need for efficiency is one big driver. At some point, you can only add so many one-off modules to a core system before it starts to get unwieldy, with lots of inconsistencies displayed to end users. At the small bank level, a new core can mean a radically new customer posture, one that can really set up a bank for the future. BTN looks at the transformation that First Community Bancshares in Bluefield, VA, was able to achieve.
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Growing importance of systems enhancement