IBS Journal March 2015


US market: enough business for everyone?


Is the US banking market finally waking up to the uncomfortable reality of the lack of choice among local providers, as just a handful of big players dominate the market? Perhaps the time has come to look outside the US borders.


The consolidation of the US core banking software providers over the last decade has resulted in a large number of systems of various technologies, sizes, types and ages residing in the hands of just a few vendors. The outsiders have been eyeing the market that has some 10,000 financial institutions, ranging from tiny community banks and credit unions, to mid-sized regional players, and all the way to top-tier banks. So far, the success rate of such endeavours from the international suppliers has left much to be desired. However, it seems that finally, the times they are a-changin’. Core processing and the need for it to keep up with the times, new regulations and new products have come to the fore again in the US. The financial crisis shifted the banks’ priorities elsewhere and also left them with very limited budgets, but the profitability is returning and with it the appetite and the means to modernise the core.


‘Banks want to break the shackles


of legacy outsourcers that offer little differentiation,’ Amit Dua, VP and regional head at Infosys, told IBS at the BAI Retail Delivery Forum in Chicago last year. The India-based vendor is preparing to bring to market an outsourced version of its Finacle core banking system for commu- nity banks and other small entities, which due to their size and volume of operations tend to gravitate towards a hosted set-up. Infosys’ rivals Temenos and TCS Financial Solutions already have hosted options of their core systems available in the US, T24 and Bancs, respectively. The community banking market is active, with these insti- tutions forced to modernise to compete and be relevant to the new generation of customers, and there is growing dissatisfaction with the tight hold that the domestic core vendors have. For onsite deployment, Infosys is


‘Banks want to break the shackles of legacy outsourcers


that offer little differentiation.’ Amit Dua, Infosys


targeting large regional banks with assets north of $20 billion with Finacle, and was understood to be bidding for around ten such projects over the last year. The suc- cessful cutover at Discover Financial Ser- vices has undoubtedly been a milestone for the vendor, and so has the signing of Eastern Bank for its channel software, e-Finacle. Interestingly, in both cases, the banks are moving away from an out- sourced set-up to an onsite deployment (Discover is moving off a Fiserv platform and Eastern Bank is replacing FIS). Zions Bancorp is a showcase example


for TCS, with this project finally reaching a significant milestone earlier this year, following an 18-month endeavour. The overhaul, dubbed Future Core, is expected to span five years and will see Zions centralise and harmonise its operations


38 © IBS Intelligence 2015 www.ibsintelligence.com


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