Small Banks Looking Toward Automation for Core Systems

Core systems among smaller financial institutions are far less reliant on paper-based operations and are moor geared toward digital alternatives and automation, according to a report from Boston-based analyst firm Celent.

The report, titled "Core Banking Solutions for Small Banks: A North American Perspective," examines the solutions focused on the smallest tier of banks in North America, specifically vendors that have more than 80 percent of their clients under $1 billion in assets.

The report states that a significant percentage of banks are looking to replace their legacy solutions with more efficient and flexible core banking systems. Celent found that banks prefer core banking solutions with multichannel options like ATM, mobile, Internet, and IVR to attract customers. Core banking solutions are also expected to facilitate product development and provide flexible customization capabilities.

Celent also found that while larger banks generally looked to in-house solutions for core system upgrades, smaller banks prefer hosted or service bureau implementations. Further, the report states that there is a decrease in small bank core replacements, as the financial climate has made it difficult for them to commit the resources to a costly and time-intensive process like a core switch.

Among the core solutions for small banks examined in the report, Celent found that they vary in platforms and operating systems. Nearly all of them have a presence almost entirely in the U.S. and Canada.

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio