Improving Product Development Through Core Systems Replacement

Banks realize that the technology supporting their core platforms is aging and could potentially become an inhibitor, especially with urgent competitive needs including speed to market of new products, easy support of multiple channels and movement toward a customer-centric banking approach. Internationally, if you look at the adoption of modern technology platforms, there are banks in foreign countries that are well on their way. In some cases it's easier for those countries to adopt the more modern technology because they're starting from nothing, versus the U.S., which has a very mature market and must convert the old to the new.

So the fundamental questions are: What is the business benefit and what is the business case to replace the core? Speed to market is first, channel flexibility is second and customer service is third. There will likely be other drivers, including cost reduction associated with managing a more simplified technology platform and less data.

Changing a core banking platform is like changing the engine of a plane in flight. A number of technology vendors claim foreign banks are reaping the benefits of modern platforms already implemented in more than 70 countries. While this technology may not be proven at tier-one U.S. banks and questions related to U.S. regulatory compliance may remain, business and technology executives who consider the capabilities of these platforms when making near-term organizational changes, process improvements and technology investments will be better positioned to capture potential overall business benefits.