Drivers for change The drivers for replacing core systems are often to do with improved functionality. That might appear an obvious statement, but functional considerations significantly outweigh cost and technical reasons.When all of IBS's case studies in our Core Banking Systems Case Studies Online are analysed, common causes cited by the banks fall into the categories of breadth of functionality, ability to support new products and ability to support future strategy. This is true across each area of banking, whether universal, retail, corporate, treasury, or wealth management/private banking.
Extract: Drivers for implementing a new system
The second most common driver is centralisation and/or standardisation, sometimes following mergers or acquisitions. This is most pronounced in universal and retail banks. In developing countries, the centralisation is sometimes still around moving from decentralised branch systems (this was the case at Caja PopularMexicana, for instance). In developed countries, the trend is often towards one or multiple hubs supporting a range of operations or at least a common system across the business. Once more, this is common regardless of the form of banking and, indeed, where regulations allow, one of the sectors that has enthusiastically embraced centralisation is private banking/wealth management.
Centralisation is also usually the route for start-up operations: Rabobank's hub approach for its International Direct Banking operation was intended to allow the bank to open two new country operations per year. However, centralisation and standardisation does not always work. There are plenty of examples of banks failing to turn the vision into reality and there are often country-specific compromises. This was the case at AXA Bank in Switzerland, for instance, which went against the overall bank strategy for a number of entirely valid reasons and had a much faster implementation as a result.
