Journey to the Core: Four Banks and Their Replacement Stories

Celent Roundtable covers the latest trends, main drivers, and the challenges of core replacement.

By Nancy FeigFour very different banks came together yesterday to tell four different stories about core conversion at yesterday's Celent Banking Roundtable in New York.

Webster Bank (Waterbury, Conn.; $17 billion in assets) did a big bang replacement of many systems including core in 2005. Countrywide Bank(Alexandria, Va.; $93 billion in assets) converted its core in 2005 after acquiring a community bank and to support growth from $200 million in assets to $93 billion. National City Bank (Cleveland; $134 billion in assets) went through an "urban renewal," where it built around core rather than replaced it. And finally, Silicon Valley Bank (Santa Clara, Calif; $5.6 billion) is in the process of replacing its core to follow its market, which is mostly online and increasingly global.

One thing that the banker panelists all agreed on was that the cultural change that goes along with a core replacement is probably the toughest variable.

"Technology is the easy part. It's the people and processes that are tough," said David Webb, CIO of Silicon Valley Bank.

To gasps from the audience, Fredrick, SVP and CIO of Webster Bank, related how the first training she had to give her staff was on how to use a mouse, which 20 percent of her staff didn't know how to do.

Although the four bankers in attendance from each had recently gone through a core conversion or were in the process of doing so, the panelists were not convinced that now is the time for U.S. banks to start replacing their core systems.

Fredrick said that she couldn't see large banks like Bank of America replacing their core systems. Like her bank, others will only replace their cores if the conversion serves a specific business need, she said.

"Investments will be in SOA and relationship-based pricing," said Ed Page, SVP and business information officer of National City Bank.

Moderator Bart Narter summed it up best by saying, "switching core systems is not for the faint of heart."