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Perhaps the move by a few UK mid-tier banks into system selection mode in 2006 was prompted by the activities of Alliance & Leicester and Abbey, culminating in the aforementioned deals at Nationwide and Co-operative. Glitnir’s One-G project may well have been influenced by Kaupthing Bank’s progress. It took ages for the big Australian banks to make core system decisions – then, when one did, two others jumped as well in quick succession in 2008.


Unfortunately, there is one other influence in some selections: corruption. While less common than in the past, partly due to regulatory scrutiny, instances still occur, and indeed it is still rife in a few developing countries, with some developed ones not immune either.


Emerging Trends


While the general sentiment through the last few years had been somewhat lukewarm, it’s quite evident that the undercurrents when it came to IT investments have always remained buzzing. Not only has it moved northwards in terms of the number of deals, but the profile of the sales have been distributed across the globe, and pretty much across system types too. If, as we believe, market place competition is ultimately the most common reason for banks to finally take the plunge with core system replacement, then this could mean that more and more banks move from analysis to action in the next few years if new entrants descend, with strong brands, new business models and the ability to harness new technology.


Some country or regional players have international aspirations. In-house developments turned into commercial packages can produce offerings, albeit not without challenges (cultural for the organisation and functional in terms of having been built for one institution). As mentioned, there is Oracle FSS’s new offering. If this was to succeed and Misys’ Bankfusion (now Fusionbanking Essence) was to finally break into the mainstream, then this could be a problem for those suppliers with older systems, with a potential market starting to form around solutions that would be perceived as ‘next generation’.


Cloud, Saas, Outsourcing and hosted models


There is ever more discussion about forms of hosted back office solutions around the globe, including via the cloud. Cloud in its real sense has been mostly adopted in Africa, typically among microfinance organisations, but with much lesser penetration levels in other markets - especially where outsourcing has been accepted to be strong. The banking sector yet to fully adopt different forms of pay-as-you-go models for its core business. While outsourcing itself has been an integral part of many banks for decades, albeit with a much higher prevalence in some (such as the US and Nordic region), it is largely to do with small to mid-tier banks as customers. Often, the outsourcing has been linked to types of banks e.g. the German cooperative banks have had their own long-standing bank-owned providers. In terms of outsourcing, there have been a number of announcements, partnerships and acquisitions by core system suppliers in the last few years, reflecting the expectation of heightened demand.


Well established in some markets as the way to do business, outsourcing is still barely scratching the surface in others. Some suppliers remain wedded to their


Market Dynamics Report www.ibsintelligence.com 15


market overview


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