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CORE BANKING
Core banking in the cloud – cruising at 30,000ft in 2018
Time marches on, and CTOs count another year in which they’ve managed to get by with their ageing legacy systems. But with a slew of regulation headed their way and greater demands from a digital customer base, can they afford to stand in the way of change?
Senior Reporter Alex Hamilton
T
he times, they are a-changin’. The digitisation of the banking industry is in full swing, and as we explored in the January issue of IBS Journal, 2018 is the year that
regulation will change everything. Open Banking, PSD2, GDPR – all of these place a strain on a bank’s many disparate systems. But what of the core banking system, sat in the centre, eking out its existence, shuddering under the weight of bolt-on software, re-routes and APIs? Core Banking systems have survived via their intrinsic simplicity, yet some are older than most millennials.
Just over 20% of respondents to a recent survey conducted by Accenture and core banking vendor Temenos (see page 16) said that digitisation on their core systems were a priority. A further 32% said that legacy systems represent the biggest barrier to digitisation across all channels within their institutions. Are those figures still too low, though? Will 2018 be the year that that final straw is placed upon the camel’s back?
“There’s nothing magic about 2018 per se, but banks have avoided, deferred and delayed the issue of core modernisation for so long that it now places them at a competitive and operational disadvantage,” says Frank Sanchez, CEO and founder of cloud core banking firm Finxact. 2018 is a good time to change, though, in the sense that “the fintech market has developed advanced and viable alternatives to fully modernise and replace the legacy, while delivering increased efficiency, reduced operational risk and greater competitive agility”. In other words, adds Sanchez, the sooner a bank starts a migration, the sooner it can reap the benefits.
Christopher George, senior vice president for client strategies at Nymbus, says that “any bank CEO who insists on staying with a legacy core is putting his institution in a lose-lose situation.
Angelique Schouten, Ohpen: IT understanding and expertise needs to be added at board level of banks
The result, says George, will be “inferior software and an inferior infrastructure”. The Nymbus man doesn’t pull any punches: “Banks that go this route are destined to fall behind competitively. Soon that loss in software features and infrastructure efficiency will turn into a loss of customers and a loss of dollars.”
Angelique Schouten, founding CEO of Ohpen UK, says: “Core banking systems have survived due to the fact that they have been up and running for decades in an infrastructure that has increased
www.ibsintelligence.com | © IBS Intelligence 2018
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