Historical SLT Performance overview 2013 – 2016
SLT 2013 | Performance Overview lIt became clear whenthe2012analysis was under way, but
also perhaps for observers ahead of this, that 2011 wasn’t the low point for the sector after all. The depressed nature of the core systems market continued and, indeed,
2012 was the quietest yet. Far from deciding to replace their
legacy platforms, most institutions were willing to keep them patched up for at least another year. This was still particularly the case among mid-tier and larger banks, with no return to the pre-crisis activity in this segment. Some of the projects that started ahead of the financial and economic turmoil rumbled on and a few saw breakthrough cut overs during 2012, but large banks setting out on such a journey comprise low single figures each year.
From a geographical standpoint, the one ray of light was Africa, with appreciably more sales in 2012 than 2011, while at least a few other regions more or less held firm. The clearest drops were in Central and South-East Asia (far less activity in markets such as Bangladesh and Nepal), and Western Europe. The lack of life in the latter was reflected in the fact that the core banking system heavyweights, Oracle FSS and Temenos, picked up one and two deals respectively (a small domestic bank in Southern Europe for the former, two small international operations in Luxembourg for the latter).
No doubt much of the activity continued to be around the
core, rather than the core itself. Understandably, compliance and risk management remained areas for investment, with this likely to have a dampener effect on the core systems market. In the long-term, the way to avoid adding yet more software, spreadsheets and extraction programs is to streamline the architecture, but the burden of the requirements means that stop-gap solutions are the order of the day for many.
Much the same was true in payments. While not a focus of
the Sales League Table, there was a lot of work going on in 2012, particularly in Europe for SEPA, which looked likely to push the core system replacement plans down the ‘to do’ list for anotheryear. The activity here often mirrors the core systems market, with typically less than optimum solutions being implemented to meet the regulatory deadlines rather than banks seeing this as the moment to streamline and transform.
At the channel level, there was a fair amount of activity,
particularly as banks realised that mobile banking was not a fad and that their first generation internet solutions had already become out dated. Once more, the best channel delivery, with seamless movement between the channels, fast time-to- market,slicksupportofmultipledevices, and real-time, single customer view, are likely to need a solid, real-time core, but for the time-beingthereare still improvements that can be made by putting new layers in front of the legacy.
Of course, when talking about the lack of activity in the core
market, it is important to remember just how much activity there was up to 2008, so there are plenty of tier three and four banks that have had successful projects in the last decade and are benefitting as a result, with no need to replace. What has been more surprising is the lack of enthusiasm for core renewal by the rest. There will be a competitive advantage for those that have newer platforms but, for under pressure managers, perhaps fearful of their jobs and/ortheir own institutions’ long-termfutures, that seems insufficient to embarkon the multi-year, high-risk renewal programmes.
There were a couple of other factors that are worth noting.
First, the need for renewal as a result of industry consolidation had abated of late. Where suppliers, most clearly Temenos, acquired companies for their user bases, there were initially pronouncements about support for only another three or five years. A few users moved, although not always to the new owners’ systems, but most did not and, in time, the reality of the situation and the desirability of the continued maintenance revenue meant the old systems were given a stay of execution. Those acquired systems, such as Viveo’s V. Bank, are dying but it is a longer death than initially intended.
Second – and suppliers are not going to like this – there is an
argument that the lack of new systems is one of the biggest reasons for the lack of new sales. When banks analyse the options, they are often underwhelmed. For one thing, despite the fact that the Sales League Table looks well-populated, there is fundamentally too little choice. Most systems on the Table have roots of 20 years or more, a fair few look to be in decline, there are understandable concerns about the delivery track-
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